Reason Foundation - Policy Areashttp://www.reason.org/areas
info@reason.org (Reason Foundation)http://www.pjdoland.com/chai/?v=0.1Presidential Choices Shouldn't Be Limited To the Lesser of Two Evilshttp://www.reason.org/news/show/presidential-choices-shouldnt-be-li
The Orange County Register <p>Hillary Clinton and Donald Trump won their party's&rsquo; presidential primaries in California and they are poised to square off in November&rsquo;s general election. Polls show Clinton and Trump are both historically unpopular, yet large numbers of Americans who say they can&rsquo;t stand them will probably vote for one of them anyway. They&rsquo;ll do this, in part, because they&rsquo;ll feel forced into choosing the lesser of two evils. <br /> <br />People shouldn&rsquo;t feel (or more importantly, vote) this way, however. U.S. presidential elections weren&rsquo;t intended to devolve into contests between just two candidates. The Constitution does not mention political parties at all, and the Framers were worried that the rise of powerful factions would undermine liberty. <br /> <br />As John Adams wrote in a letter in 1780: &ldquo;There is nothing which I dread so much as a division of the republic into two great parties, each arranged under its leader, and concerting measures in opposition to each other. This, in my humble apprehension, is to be dreaded as the greatest political evil under our Constitution.&rdquo; <br /> <br />The Democratic and Republican parties are dominant, but voters do have choices other than Clinton or Trump. For example, for the second presidential election in a row, the Libertarian Party has nominated Gary Johnson, former two-term governor of New Mexico. His running mate is William Weld, former two-term governor of Massachusetts. <br /> <br />Weld and Johnson both served as moderate Republicans who generally opposed runaway government spending while advocating social tolerance. Weld cut spending and privatized state services in liberal Massachusetts. Johnson pushed for school choice reforms and lower taxes in New Mexico. Both men support drug decriminalization and same-sex marriage. Between them, they have 16 years of successful executive experience as governors, having worked effectively with legislators and the business community alike. <br /> <br />Contrast that with the presumptive Republican and Democratic nominees: Donald Trump is a thin-skinned reality TV star with an authoritarian streak. Hillary Clinton is a former secretary of state whose signature contribution to foreign policy &ndash; the 2011 military intervention in Libya &ndash; was an unmitigated disaster. <br /> <br />Yet political pundits will continue to depict this race as a clash between just two choices. The GOP, in particular, is fond of telling people that a vote for the Libertarian Party is a vote for Clinton. In reality, nothing could be further from the truth: A vote for Gary Johnson isn&rsquo;t a vote for anyone other than Johnson. Indeed, the Founders never intended to set up a system that continuously produced just two choices, and in almost every other aspect of our lives Americans recognize that it&rsquo;s better to have more choices than fewer. This is, coincidentally, the creed of the Libertarian Party: choice allows people to be happier and more fulfilled, and government interference reduces choice by limiting competition. <br /> <br />The most important thing any voter can do is vote for the person who best embodies his or her ideals, whether or not that candidate has a good chance at winning the White House. Johnson, for example, has little chance of winning the presidency. But he can achieve success in other ways. If he can collect 15 percent of Americans&rsquo; support in major polls, for instance, the Libertarians could qualify for the nationally televised presidential debates this fall. And if they get 5 percent of the vote in November, they&rsquo;d qualify for federal campaign funding in the 2020 presidential election cycle. Those types of incremental progress might help usher in ever bigger changes and choices beyond two stagnant political parties offering presidential candidates Americans don&rsquo;t like very much. <br /><br /> <em>Robby Soave is associate editor of Reason.com and Reason magazine.</em></p>1014604@http://www.reason.orgMon, 20 Jun 2016 09:01:00 EDTinfo@reason.org (Robby Soave)Federal Overreach, the Gunnison Sage Grouse, a Lawsuit, and Politicshttp://www.reason.org/blog/show/federal-overreach-the-gunnison-sage
<p>Last week Colorado made good on Governor Hickenlooper&rsquo;s pledge to sue the federal government to rescind the November 12 decision to list the Gunnison sage grouse under the Endangered Species Act.</p>
<p>Colorado&rsquo;s <a href="http://www.lawweekonline.com/wp-content/uploads/2014/12/Colorado-60-day-letter.pdf" target="_blank">notice of intent to sue</a> is notable for a couple reasons, one of which is politics. The federal government has so badly overreached by listing the Gunnison sage grouse that Gov. Hickenlooper, a loyal Democrat, feels he has no recourse but to sue and engage in a very public fight that could damage the Obama administration and Democrats in general. The Gunnison sage grouse lawsuit has significance that reaches far beyond the borders of Colorado.</p>
<p>Colorado is a &ldquo;purple&rdquo; state, which means that it is one of a handful of swing, or battleground, states in presidential elections. Gov. Hickenlooper made it clear months ago that he would sue if the Gunnison sage grouse was listed. So it is astounding the Obama administration went ahead and knowingly did something&mdash;listing the grouse&mdash;that would put Democrats in an unfavorable light and give Republicans political ammunition. While the Interior Department&rsquo;s decisions to list species under the Endangered Species Act are technically insulated from political considerations, the reality is the White House could have pressured Interior Secretary Sally Jewell and U.S. Fish and Wildlife Service Director Dan Ashe, both political appointees, not to list the grouse.</p>
<p>In 2012, Obama won 51.5% of Colorado&rsquo;s popular vote, to Romney&rsquo;s 46.13%. Following the 2014 federal and state elections, Colorado became even purpler. At the federal level, Cory Gardner (R) beat incumbent Mark Udall (D) by a margin of 48% to 46% for the contested U.S. Senate seat, Colorado&rsquo;s other Senator, Michael Bennet, is a Democrat, and the state&rsquo;s Representatives continue to be split 4-3 in favor of Republicans. In the 2014 state elections, Republicans also gained ground, picking up one Senate seat, thereby achieving an 18-17 majority, and picking up three House seats, which narrowed Democrats&rsquo; majority to 34-31.</p>
<p>Colorado&rsquo;s Gunnison sage grouse lawsuit may drag on for much of 2015 and perhaps in to 2016, which will be a constant reminder to many voters, both in Colorado and elsewhere, that the Obama administration, and by association Democrats (especially those seeking federal office), are out of touch with state and local priorities.</p>
<p>With the 2016 presidential election cycle fast approaching, a couple of factors involved with the Gunnison sage grouse are going to be in play. Democrats are worried that the legacy of an increasingly unpopular president will damage them, especially in the all-important swing states. Colorado&rsquo;s Gunnison sage grouse lawsuit will serve as a reminder of this, especially because it was filed at the behest of a Democrat governor.</p>
<p>Also, in the 2016 federal elections the environment is going to be an issue Democrats use to hammer Republicans by portraying them as out of touch with American values, corporate shills, mean-spirited and backward-looking. Yet by listing the Gunnison sage grouse the Obama administration has handed Republicans an enormous gift for the 2016 election cycle that they can use to portray Democrats as out of touch, eager to rely on heavy-handed, one-size-fits-all solutions from an imperious and distant federal government, dismissive of state and private approaches that are a better fit for many issues, and, if Republicans take environmental issues seriously, as anti-environment.</p>
<p>More broadly, Republicans can use the lawsuit, the looming possibility of the greater sage grouse being listed across 11 western states and 165 million acres, and conservation in general to demonstrate that they are pro-environment, forward-looking, and in favor of innovative state-based and private solutions to many environmental issues that are superior to inflexible and insensitive dictates from Washington, D.C. Democrats figured out long ago that conservation is an effective political issue and fundraising tool because its outstanding visual and public relations values elicit sympathy from a broad spectrum of voters, and because Republicans have ceded the field to them. Perhaps with issues like the Gunnison sage grouse this will begin change.</p>
<p>The second reason Colorado&rsquo;s notice of intent to sue over the Gunnison sage grouse&rsquo;s listing is remarkable is its substance, which paints a damning picture of the federal government, especially the Fish and Wildlife Service, or FWS as its referred to in much of the notice (In a previous post, <a href="http://reason.org/blog/show/save-the-gunnison-sage-grouse-from" target="_blank">here</a>, I detailed Colorado's extraordinary conservation efforts for Gunnison sage grouse conservation, which were undertaken with the understanding the federal government would not list the grouse). The notice of intent to sue states:</p>
<blockquote>
<p>&ldquo;In making the listing decision, FWS improperly analyzed the required factors to make its determination that the Gunnison sage-grouse is threatened; failed to rely on the best available science; and failed to give adequate weight to the extensive conservation efforts undertaken by state and local governments and private landowners. In designating critical habitat for the Gunnison sage-grouse, FWS failed to consider economic impacts of the designation and failed to demonstrate that currently unsuitable habitat included in the designation is essential to the conservation of the species.&rdquo;</p>
</blockquote>
<p>The notice of intent to sue then provides details about conservation efforts, most notably in the Gunnison Basin, located in Gunnison County, Colorado that &ldquo;comprises approximately 86% of the population and covers almost two-thirds (63%) of the occupied habitat of the species.&rdquo; According to notice:</p>
<blockquote>
<p>&ldquo;With the exception of federally listed species and migratory birds, Colorado has exclusive jurisdiction over wildlife within its boundaries. To date, the State has invested close to $40 million in voluntary conservation programs, land acquisition, research, monitoring activities, habitat treatments, translocation, and predator control programs aimed at conservation of Gunnison sage-grouse and its habitat. State and county-led voluntary conservation programs have resulted in protection of over 140,000 acres of privately owned habitat. In combination with areas of habitat that are federally-owned and managed, approximately 75% of occupied habitat has some level of protection.&rdquo;</p>
</blockquote>
<p>The logical question is: what more could Colorado and Gunnison County have done to prevent the grouse&rsquo;s listing and what benefit does listing under the Endangered Species Act provide?</p>
<p>In its notice of intent to sue, Colorado alleges the U.S. Fish and Wildlife Service violated the Endangered Species Act by listing the Gunnison sage grouse because the agency &ldquo;failed to consider sufficiently the best science and impacts of conservation efforts.&rdquo; The notice provides the following examples that give a sense of how incorrect and out of touch with reality the Service is, and which strongly suggest the Service was less interested in an objective evaluation of the data than in reaching a predetermined decision to list the grouse:</p>
<ul style="list-style-type: square;">
<li>&ldquo;The Service accorded little weight to indications that the Gunnison based population is stable and thriving, including the fact that the current population now exceeds the targets set in the Rangewide Conservation Plan and that the Gunnison basin lek counts are at an all-time high.&rdquo;</li>
<li>&ldquo;The Service misinterpreted or ignored population viability analysis showing a very low probability (less than one percent) that the species will go extinct within the next fifty years. Current estimated male counts in the Gunnison basin are more than 50% higher than they were when two of the models were developed&rdquo;</li>
<li>&ldquo;The service acknowledged that current residential development is a threat of &lsquo;low magnitude to the Gunnison based birds at the population level,&rsquo; but concluded that residential development <em>elsewhere</em>, in some of the satellite populations, poses a threat to the species range wide, included the Gunnison basin and that future development in Gunnison County continues to pose a threat.&rdquo; (This assertion by FWS is particularly telling of the agency&rsquo;s willingness to use false information to support listing because Gunnison County enacted very restrictive sage grouse-specific zoning ordinances and hired the nation&rsquo;s only county-based endangered species biologist to help implement the ordinances.)</li>
<li>&ldquo;The Service accorded little or no weight to scientific evidence submitted by CPW [Colorado Parks &amp; Wildlife] regarding the degree of threat to the Gunnison based population posed by disease, drought, fire, and climate change.&rdquo;</li>
<li>&ldquo;In determining that the Gunnison basin population could not likely survive if the satellite populations were extirpated, FWS engaged in speculation that is unsupported by the best available data.&rdquo;&ldquo;In evaluating threats to sagebrush habitat in the Gunnison based, FWS misinterpreted the best available science regarding the historical range and distribution of the species. The Service overestimated the extent of historical range and relied on an improper understanding of habitat fragmentation as applied to the Gunnison sage-grouse.&rdquo;</li>
</ul>
<p>&nbsp;In sum, according to Colorado&rsquo;s notice of intent to sue:</p>
<blockquote>
<p>&ldquo;The Service underestimated the level of protection that has been provided via federal, state, local and private conservation efforts to conserve sagebrush habitat in the Gunnison basin. The Gunnison basin area has met or exceeded the Rangewide Conservation Plan target for conservation and protection of seasonally important habitat on private lands.&rdquo; (This is the critically important moist habitat&mdash;meadows, wetlands streamsides&mdash;that adults and chicks depend on for high quality forage and insects in the summer, when the sagebrush uplands become dry and contain little palatable food)</p>
<p>&ldquo;Federal and state agencies responsible for management of publicly owned habitat have entered in to a formal agreement [<em>sic</em>] to protect sage-grouse habitat on their lands, and other federal programs have also resulted in the protection, improvement and restoration of habitat in the Gunnison basin. [Federal and state agencies have entered into two such agreements, a Candidate Conservation Agreement with Assurances, or CCAA, that covers private land, and a Candidate Conservation Agreement, or CCA, that covers federal land]. The Service&rsquo;s conference opinions on the CCAA and the CCA found that the implementation of the programs would provide a long-term, net benefit for the Gunnison sage-grouse on a landscape level. FWS acknowledged the effectiveness of these efforts and noted that they have had the most impact in the Gunnison basin, but did not adequately weigh them in the listing decision.&rdquo;</p>
<p>&ldquo;In addition, FWS engaged in a formal analysis of conservation efforts under its PECE (Policy for Evaluation of Conservation Efforts), but never released a draft or final version of the analysis [to] the public for review. Accordingly, the State is unable to evaluate whether the analysis was reasonable and gave sufficient weight to the many ongoing conservation programs.&rdquo;</p>
</blockquote>
<p>Last is the issue of how the Fish and Wildlife Service designated critical habitat. According to Colorado&rsquo;s notice of intent to sue:</p>
<blockquote>
<p>&ldquo;The ESA requires the [Interior] Secretary to consider economic impacts in designating critical habitat&hellip;The Service had an economic analysis prepared, but did not take the results into account when designating critical habitat. Further, the Service included areas as critical habitat that are not suitable for Gunnison sage-grouse, and failed to demonstrate that inclusion of currently unsuitable habitat was essential to the conservation of the species. FWS also determined that all currently occupied areas are essential for the persistence and conservation of the Gunnison sage-grouse, even though under the ESA&hellip;barring unusual circumstances, critical habitat should not include the entire geographical area which can be occupied by the species.&rdquo;</p>
</blockquote>
<p>Given all this, it is no wonder Colorado is suing to rescind the listing of the Gunnison sage grouse and return management to the state. It will be interesting to see how this case, and the larger issues on which it touches, shake out.</p>1014100@http://www.reason.orgWed, 17 Dec 2014 08:45:00 ESTinfo@reason.org (Brian Seasholes)Millennials Signal the Political Futurehttp://www.reason.org/news/show/millennials-signal-the-political-fu
The Orange County Register <p>A new field poll shows just 45 percent of Californians approve of the job President Barack Obama is doing, the lowest figure during his presidency.</p>
<p>In the 2012 election, millennial voters &ndash; Americans 18 to 29 years old &ndash; helped propel President Obama to victory over Mitt Romney. Here in California, 71 percent of millennials voted for Obama.</p>
<p>A recent in-depth Reason-Rupe poll, however, finds these millennials don&rsquo;t conform to preconceived political stereotypes and aren&rsquo;t traditional liberals &ndash; they are social liberals and fiscal centrists.</p>
<p>Reason-Rupe finds millennials hold many of the positions on social issues that you&rsquo;d expect. For example, millennials think immigrants strengthen American society (69 percent), believe the government should allow same-sex couples to get married (67 percent) and think marijuana should be legal (57 percent).</p>
<p>While they are more likely to agree with Democrats on social issues, millennials chafe at the Democratic Party&rsquo;s penchant for nanny state regulations. Reason-Rupe finds 74 percent of millennials oppose bans on large sugary drinks in restaurants and theaters; 64 percent are against bans on incandescent light bulbs; 62 percent don&rsquo;t think plastic bags should be banned at grocery store checkouts; and 60 percent don&rsquo;t think e-cigarettes should be banned in public places.</p>
<p>And when it comes to economics, most millennials are not your average Occupy Wall Street activists.</p>
<p>The Reason-Rupe study of young Americans finds strong majorities are favorable toward both profit (64 percent) and competition (70 percent). Millennial support for the free market system also trounces support for a government-managed economy, 64 percent percent to 32 percent. A majority of millennials (55 percent) would even like to start their own business one day.</p>
<p>At the same time, millennials do want government to help the disadvantaged.</p>
<p>Seven in 10 millennials say government should guarantee food, housing, health care and a minimum income to the disadvantaged.</p>
<p>Additionally, 71 percent of millennials favor raising the minimum wage and 58 percent support spending more on financial assistance to the poor.</p>
<p>While millennials often exhibit greater confidence in government than other cohorts, their skepticism is on the rise. In 2009, only 42 percent of young Americans thought government was inefficient and wasteful, but by 2014 this number soared to 66 percent.</p>
<p>Furthermore, in 2009, an NBC/Wall Street Journal poll found that 64 percent of young Americans wanted government to &ldquo;do more to solve problems.&rdquo; However, the 2014 Reason-Rupe survey found only 48 percent want government to do more.</p>
<p>Despite millennials&rsquo; fiscal centrism, their social liberalism dominates when it comes time to vote. Millennials&rsquo; top three 2016 presidential picks are Democrats &ndash; Hillary Clinton (39 percent), Elizabeth Warren (9 percent) and Joe Biden (9 percent).</p>
<p>Yet millennials don&rsquo;t like Democrats so much as they view them as the least bad of two bad options. Across 15 salient public policy issues, such as privacy, government spending and drugs, millennials say they trust &ldquo;neither&rdquo; party to handle 12 of the 15 issues.</p>
<p>Given millennials&rsquo; lack of confidence in both major political parties, it isn&rsquo;t surprising they are open to change. In fact, a majority (53 percent) of millennials say they would vote for a candidate who is both economically conservative and socially liberal.</p>
<p>Some millennials who fit this socially liberal and fiscally conservative profile were called a &ldquo;raft of ethnically diverse young libertarians who hold seats in L.A. County&rsquo;s huge GOP apparatus&rdquo; by Reuters recently.</p>
<p>&ldquo;Despite personal politics that might seem more in tune with Democrats &ndash; world peace, ending the war on drugs and addressing global warming top the list of concerns for many &ndash; these millennials say they are more comfortable with Republicans&rsquo; emphasis on freedom than Democrats&rsquo; penchant for regulation,&rdquo; Reuters&rsquo; Sharon Bernstein wrote.</p>
<p>Millennials are socially tolerant and support personal freedom, free markets and entrepreneurship. Is either major political party ready to adapt to that?</p>
<p><em>Emily Ekins is director of polling at Reason Foundation. This article originally appeared in the <a href="http://www.ocregister.com/articles/percent-634939-millennials-government.html">Orange County Register</a>.</em></p>1014023@http://www.reason.orgMon, 22 Sep 2014 11:19:00 EDTinfo@reason.org (Emily Ekins)Selective Outrage Over NSAhttp://www.reason.org/news/show/selective-outrage-over-nsa
Orange County Register <p dir="ltr">Another National Security Agency spying scandal recently erupted when some of the documents obtained by whistleblower Edward Snowden revealed that the U.S. was even spying on the heads of state of American allies, including German Chancellor Angela Merkel's cell phone.</p>
<p dir="ltr">Sen. Dianne Feinstein, D-Calif., chairman of the Senate Intelligence Committee and usually a staunch supporter of government spying programs, threw another twist into the scandal when she adamantly condemned the spying on U.S. allies. &ldquo;With respect to NSA collection of intelligence on leaders of U.S. allies &ndash; including France, Spain, Mexico and Germany &ndash; let me state unequivocally: I am totally opposed,&rdquo; Feinstein said in a statement. &ldquo;It is abundantly clear that a total review of all intelligence programs is necessary so that members of the Senate Intelligence Committee are fully informed as to what is actually being carried out by the intelligence community.&rdquo;</p>
<p dir="ltr">Sen. Feinstein's turnabout even took the government surveillance community by surprise. &ldquo;We're really screwed now,&rdquo; Foreign Policy magazine quoted one NSA official as saying. &ldquo;You know things are bad when the few friends you've got disappear without a trace in the dead of night and leave no forwarding address.&rdquo;</p>
<p dir="ltr">But what is really behind Feinstein's newfound criticism of government snooping activities?</p>
<p dir="ltr">Through Snowden, other intelligence whistleblowers and various news reports, Americans now know that the government has for years been intercepting and monitoring e-mail, phone, text and other electronic communications, usually without probable cause or warrants. Given the alarming evidence about the extent of the encroachment by government into our private lives, tapping Chancellor Merkel's phone seems to be a strange place for Sen. Feinstein to draw the line on NSA spying.</p>
<p dir="ltr">Perhaps Feinstein's outrage stems from the unwritten rule that there are some laws for the political elite, and other laws for the rest of us. As George Orwell noted in &ldquo;Animal Farm,&rdquo; his dystopian novel, &ldquo;All animals are equal, but some animals are more equal than others.&rdquo;</p>
<p dir="ltr">Make no mistake, Feinstein still supports government snooping. She has proposed a &ldquo;reform&rdquo; bill called the FISA Improvements Act of 2013 that would provide some token measures of transparency and oversight by requiring the NSA to issue public reports about how often it accesses its call-records database and private reports to Congress summarizing major Foreign Intelligence Surveillance Act court decisions.</p>
<p dir="ltr">Unfortunately, the legislation also explicitly authorizes and codifies existing bulk communications collection and allows the NSA to keep records for up to five years. So Feinstein's bill effectively legalizes the practices most objectionable to Americans and the U.S. Constitution, and heads off more legitimate reform efforts, under the guise of fixing the system. It is no small irony that such a bill purportedly intended to increase transparency was marked up in a secret, closed-door session. The bill recently passed the Senate Intelligence Committee on an 11-4 vote.</p>
<p dir="ltr">That said, Sen. Feinstein's criticism of U.S. spying on the political leaders of allies is welcome. She would do a much greater service if only she would apply the same logic and her concern for the privacy of foreign leaders to the snooping being done on millions of innocent American and foreign citizens who are having their rights violated on a daily basis.</p>
<p dir="ltr">It is unlikely that politicians and members of the intelligence community will easily yield the status quo to meaningful reforms. Libertarians and limited government advocates on the right, privacy and civil liberties advocates on the left, and moderates will need to unite to demand that the government butt out of their private lives &ndash; and hold politicians accountable for doing so. If not, it won't be the NSA but average Americans who will continue to see their rights abridged by a government that does not respect their rights.</p>
<p dir="ltr"><br /><em>Adam B. Summers is a senior policy analyst at the Reason Foundation. This article was originally published in the</em><a href="http://www.ocregister.com/articles/state-534095-year-system.html"> Orange County Register</a> <em>on November 8, 2013.</em></p>1013617@http://www.reason.orgWed, 13 Nov 2013 14:39:00 ESTinfo@reason.org (Adam Summers)Small-Government Former Gov. Mark Sanford and Stephen Colbertâ??s Sister Win South Carolina Primarieshttp://www.reason.org/blog/show/small-government-former-gov-mark-sa
<p>Long before Mark Sanford&rsquo;s very public affair and divorce, Reason featured the former South Carolina governor in our Annual Privatization Report for his work cutting the size of, and improving the efficiency of, government in South Carolina.</p>
<p>Former Gov. Sanford continued his road back on Tuesday night winning South Carolina's special congressional GOP primary. If he wins a Republican runoff election against the primary&rsquo;s second place finisher (a recount is needed to determine Sanford&rsquo;s opponent), he will face Elizabeth Colbert Busch, comedian Stephen Colbert&rsquo;s sister.</p>
<p><a href="http://nbcpolitics.nbcnews.com/_news/2013/03/19/17376624-sanford-colbert-sister-advance-in-south-carolina-special-primary"> NBC News has the details</a>:</p>
<blockquote>
<p>A disgraced ex-governor and the sister of a popular comedian came out victorious on Tuesday in South Carolina's special congressional primary, possibly setting the stage for an uncommonly tight race for what is normally a Republican safe seat.</p>
<p>Republicans in South Carolina's 1st congressional district showed forgiveness by supporting Mark Sanford after a campaign focused as much on the former governor's personal transgressions as his record. Sanford came out on top of the crowded 16-candidate Republican primary, according to the Associated Press.</p>
<p>Sanford, who gained more than 35 percent of the vote, will face a runoff election on April 2 against the second place finisher. The race for the Republican runner-up was much closer and votes were still being tallied late into the night.</p>
<p>Also victorious on Tuesday was Elizabeth Colbert Busch &mdash; the sister of comedian Stephen Colbert &mdash; who easily won the Democratic primary and will face off against the winner of the Republican run-off election in May.</p>
<p>The seat opened in December when then-Rep. Tim Scott was appointed to fill the Senate seat vacated by Jim DeMint.</p>
</blockquote>
<p>In the <em><a href="http://reason.org/news/show/gov-mark-sanford-advancing-lim">Annual Privatization Report</a></em>, then-Gov. Sanford wrote:</p>
<blockquote>
<p>Let me be clear up front that in the long run the only way to make government truly efficient is to make it smaller, and this seems to me to be the real clarion call in highlighting the importance of privatization efforts. Efficiency and government are mutually exclusive in our system, and if our Founding Fathers had wanted efficiency I suppose they would have looked more closely at totalitarian systems. They wanted not efficiency, but checks on power in our republic.</p>
<p>In attempting to advance limited government, personal freedom and free markets over government fiat, here are a few things we have found in South Carolina:</p>
<p>Friedman, not freedom, sells: So much of why we should limit government is tied to freedom, but sadly we have found greater leverage in talking about how Thomas Friedman's new-found and so-called Flat World necessitates limits to government. The point we have made continually over the past three-plus years is that for our state to survive and thrive in this new competition of 6.5 billion people across planet earth, we must make changes to our government cost structure.</p>
<p>Business principles trump ideology in advancing limited government: As an example, many of the successes that were built into the $100 million in last year's budget savings in South Carolina were sold by talking about business principles. We argued that in the world of business, when your business model changes, you change with it.</p>
</blockquote>
<p>It will be interesting to see if Sanford can continue his comeback by winning this House seat and return to his earlier efforts to limit the size of government.</p>
<p><img src="http://reason.org/UserFiles/mark_sanford.jpg" border="0" alt="Mark Sanford" width="427" height="640" /></p>
<p>Photo by <a href="http://www.flickr.com/photos/redventures/4176023859/sizes/z/in/photostream/">Red Ventures</a></p>1013269@http://www.reason.orgWed, 20 Mar 2013 18:27:00 EDTinfo@reason.org (Cathy Reisenwitz)Does the Paul Ryan Choice Ensure a Real Housing Debate?http://www.reason.org/news/show/does-the-paul-ryan-choice-ensure-a
RealClearMarkets <p>A standard line in the punditry circuit this week has suggested that Mitt Romney's selection of Paul Ryan as his running mate will bring a welcome measure of substance to the race. If so, then cheers all around. Hopefully, one critical element of the economy and society that has gotten little substantive attention to date will get its due: housing finance and property markets. In principle, a Romney-Ryan Administration should represent a significant break from what President Obama has done in his first term on housing policy.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">President Obama has tried a number of programs to address the struggling housing market, including the Making Home Affordable programs to refinance mortgages and use taxpayer funds to pay banks to write down principal. Neither Romney nor Ryan has been very vocal about these programs in detailing how they have backlogged the foreclosure process, thus hurting homeowners and dragging out the price decline timeline. And neither has used their platforms to point out how these programs served as a back door bailout to banks by encouraging trial mortgage modifications that were never designed to succeed; instead implemented to simply delay when banks had to register losses on their balance sheets to soften the blow to earnings.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">However, on the campaign trail, Romney has said that he thinks the best way to address the housing problem is to let foreclosures process through and let prices bottom out. So a Romney-Ryan administration would be likely wind down these programs and take a new approach. But what would this new approach look like? Moreover, what does Ryan's ascendance to the ticket bring in terms of substantive discussion on new approaches to housing finance and property markets in the presidential race?</p>
<p>Looking at housing finance, Romney and Ryan have been similarly vague on reforming the role of Wall Street in homeowners' lives. Ryan has raised questions about allowing banks to become so big they need taxpayers to bail them out if they begin to fail. Many have suggested Ryan's comments imply support for breaking up the big banks. On the other hand, Ryan is an ardent critic of the Dodd-Frank regulatory reform bill and has advocated for limiting the federal government's ability to take over and dismantle failing financial institutions - no matter how beneficial such an outcome might be.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Most of the attention has focused, understandably, on Ryan's tenure as the conservative point man in Congress on the federal budget. And while discussions of spending priorities and entitlement reform paths are valid discussions on their own, they also frame important questions like how to bring market forces back to housing.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Unfortunately, a brief pass through the Ryan budget turns up little commentary on the future of Fannie Mae and Freddie Mac, the proverbial 800 pound guerrillas in the housing finance room. The two mortgage giants, taken into conservatorship in August 2008, are now essentially wards of the state. They continue to draw taxpayer money from the Federal Reserve to cover their losses and, with around $5 trillion in mortgage-related liabilities, some accounting methods would ascribe those as potential losses to the taxpayers. The Ryan budget does not account for them when considering a baseline, nor does his plan give many details about ending the ongoing bailout beyond loose acknowledgement of a bill from Rep. Jeb Hensarling (R-TX).</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">How to stop a bailout that has blown past $200 billion from continuing to grow is certainly something a budget focused leader - like Ryan - should be pushing his party to address, and that a presidential candidate - like Romney - should articulate as part of a main message to the public that Washington is wasting too much money. Yet, Ryan has done little publicly to support efforts in the House Financial Services Committee to advance the cause of ending the government-sponsored enterprises (GSE), or advancing ideas that could help restore housing finance. And unfortunately his budget is not much different from Obama's budget relative to the scope of irresponsible spending and entitlement problems.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">At most, Romney economic plans offer a paragraph to say he'll address the GSE issue, though&nbsp;without details suggesting how.&nbsp;Here it's certainly true that&nbsp;many good ideas have been&nbsp;floated (see Reason Foundation's paper "Restoring Trust in Mortgage-Backed Securities" by Mark Joffe and Anthony Randazzo for a list of recommendations), and even introduced as legislation in the House.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">The Obama campaign is similarly guilty of limiting the substantive discussion of housing finance, the GSEs, and restoring the mortgage-backed securities market (including both the questions of how and whether it should even be done).</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">The separation between Romney-Ryan and Obama-Biden is in the intellectual traditions they claim to support, particularly on tax policy.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Both Romney and Ryan have argued for a streamlined tax code with a broader base that allows for tax rates to be lowered overall. Ryan has consistently argued for a system in which markets sort out which private institutions fail and which ones thrive. Romney, a successful product of the private investment community, recognizes the inherent if sometimes traumatic value of an economy that creates value through profit and loss. Indeed, this was the bedrock bet of companies like Bain Capital that specialized in identifying undervalued assets and bringing them back to profitability.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">We know from the first term of the Obama administration what their approach to housing policy would be&nbsp;in a second term. As for Romney/Ryan, unfortunately the record of substance thus far from their camp&nbsp;has been rather&nbsp;underwhelming. Nevertheless, what would be the implications of taking the pro-growth, pro-investment framework for economic policy the GOP purportedly supports and using it to guide policy for property markets and housing finance?</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">First, we would expect to see reforms that reduce distortion in housing markets. Tax loopholes and targeted tax incentives are likely to have a rough road in a Romney-Ryan administration. Corporate tax deductions and investment tax credits are likely to become targets as fiscal conservatives look for ways to lower overall tax rates without appearing like they are sops for the well healed. This may well translate into a critique and rolling back of the home mortgage tax deduction, particularly since research shows the benefits accrue mainly to the wealthy while having little impact on the overall health of the housing market.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Second, there could be fewer attempts to use government programs to fix the housing market. Ryan infamously voted for the Toxic Asset Relief Program (TARP); admittedly going&nbsp;against his core principles. But the intellectual tradition Romney and Ryan are defending would arguably&nbsp;reject this path in the future. A hard landing is better than a prolonged, drawn out, soft economy incapable of creating the jobs necessary to keep Americans financially solvent and independent. And Romney has said, accurately, that the best thing for the housing market is a hard landing and letting the market clear out toxic debt before things get better.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Bringing substantive ideas to the debate and challenging the Obama administration on its poor housing record would be the "substance" pundits are predicting from the new VP nominee. However, in order to accomplish this, Romney and Ryan will need to sketch out more detailed plans for how they will approach the housing mess if they want there to be a real debate. Otherwise, their record suggests their approach to the struggling housing market will either be to ignore the problem or follow loosely in the path of the Obama administration.</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">&nbsp;</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">&nbsp;</p>
<p style="margin-top: 10px; margin-bottom: 10px; ">Samuel R. Staley, Ph.D. is a senior research fellow at Reason Foundation and Managing Director of the DeVoe L. Moore Center at Florida State University.&nbsp; Anthony Randazzo is director of economic research at Reason Foundation.&nbsp;</p>
<p>&nbsp;</p>1013054@http://www.reason.orgFri, 17 Aug 2012 00:00:00 EDTsam.staley@reason.org (Samuel Staley)STOCK Act Ready for Obamaâ??s Signaturehttp://www.reason.org/blog/show/stock-act-ready-for-obamas-signatur
<p>&nbsp;</p>
<p class="MsoNormal">Following weeks of delays, Harry Reid and the Senate finally sent the worthless legislation that is the STOCK Act to Barak Obama. Barring a staffer dropping it into the toilet en route to his desk, it will become law momentarily.</p>
<p class="MsoNormal">The STOCK Act is little more than a desperate attempt by Congress to retain what little confidence and respect is left for them in the hearts and minds of the American public. It accomplishes nothing, and addresses a non-issue. We have written about this fact since the Act&rsquo;s first introduction last fall, which can be found <a href="http://www.washingtontimes.com/news/2011/dec/19/congress-plays-charades-with-insider-trading/">here</a>,<a href="http://reason.org/blog/show/landslide-stock-act-more-popular-th"> here</a>, and&nbsp;<a href="http://reason.org/blog/show/senate-approves-lawmakers-insider-t">here</a>.</p>
<p class="MsoNormal">Despite the Act and the legislative process leading up to its finalized language being nothing more than political grandstanding, what the STOCK Act really represents is a missed opportunity. If Congress were truly serious about policing themselves and not merely interested in gaining back the trust of Americans through a useless law, they&rsquo;d design and pass worthwhile legislation. We wrote about this in our previous <a href="http://www.washingtontimes.com/news/2011/dec/19/congress-plays-charades-with-insider-trading/">article</a>:</p>
<p class="MsoNormal" style="padding-left: 30px;">&ldquo;To prevent members of Congress and their staffs from cashing in on their positions while in office, a law needs to require them to report all financial transactions in real time, on the date they are made and prevent them from capitalizing on any nonpublic information they receive from any source gathered in the course of their public service.</p>
<p class="MsoNormal" style="padding-left: 30px;">The proposed STOCK Act has enough loopholes to drive a truck through. A simple fiduciary duty law that covers all financial vehicles and transactions - stocks, real estate, derivatives, etc. - would be more likely to protect taxpayers&rsquo; interests. This law would be better able to spot Congress&lsquo; dubious financial deals because it includes all avenues by which members are able to use their privileged positions to enrich themselves, and it immediately shares the details of the members&rsquo; financial activity.</p>
<p class="MsoNormal" style="padding-left: 30px;">To give the law some teeth and make members of Congress think twice about using their positions to get rich, the SEC or the Justice Department must commit to forming an independent unit actively monitoring congressional stock activity and prosecuting offenders, which isn&rsquo;t happening now.&rdquo;</p>
<p class="MsoNormal">We wrote that in December, and since nothing has changed in the Act to reflect anything beyond just stocks. The law will pass, Obama and Congress will cheer their feeble attempt to demonstrate integrity, and status quo will be restored.</p>
<p class="MsoNormal">Referencing the STOCK Act, Obama had this to say:</p>
<p class="MsoNormal" style="padding-left: 30px;">&ldquo;After I sign this bill into law, Members of Congress will not be able to trade stocks based on nonpublic information they gleaned on Capitol Hill.&nbsp; It&rsquo;s a good first step.&nbsp; And in the months ahead, Congress should do even more to help fight the destructive influence of money in politics and rebuild the trust between Washington and the American people.&rdquo;</p>
<p class="MsoNormal">America is tired of first steps. Why not just get the job done right the first go around and then move on to the issues that are truly important to this country like debt reduction, tax reform, monetary madness, and a host of others. Congress doesn&rsquo;t need to waste time &ldquo;rebuilding trust&rdquo; and conning the American public into thinking their decisions aren&rsquo;t made by special interests and money. The STOCK Act isn&rsquo;t real reform. It&rsquo;s yet another missed opportunity and a distraction from what really needs to be done.</p>
<p>&nbsp;</p>1012742@http://www.reason.orgFri, 23 Mar 2012 12:52:00 EDTjames.groth@reason.org (James Groth)Which is the "Do Nothing" Party?http://www.reason.org/blog/show/which-is-the-do-nothing-party
<p>Recently before Congress Treasury Secretary Geithner responded to a question from Rep. Paul Ryan saying, "You are right to say we're not coming before you today to say 'we have a definitive solution to that long term problem.'&nbsp; What we do know is, we don't like yours."<br /><br />As Guy Benson at Townhall <a href="http://townhall.com/tipsheet/guybenson/2012/02/17/must_see_the_political_quote_of_the_year">put it</a>:</p>
<p style="padding-left: 30px;"><em>Those two sentences speak to a mentality so bereft of intellectual vigor, so stunningly and candidly shallow, so thoroughly irresponsible, so politically myopic, selfish, and cowardly, that it should disqualify this crew from a second term in office.&nbsp; What a disgrace.&nbsp; Remember this moment the next time Democrats accuse the GOP of being the "do nothing," intransigent, "party of no."</em></p>1012629@http://www.reason.orgFri, 17 Feb 2012 10:43:00 ESTadrian.moore@reason.org (Adrian Moore)Landslide! STOCK Act More Popular than Hepatitishttp://www.reason.org/blog/show/landslide-stock-act-more-popular-th
<p>In what has been called a &ldquo;legislative speed record,&rdquo; the STOCK Act has been passed in both the Senate and House with 96-3 and 417-2 voting &ldquo;yay&rdquo; respectively after just two-and-a-half months of consideration. I wrote about the Act largely being a public relations stunt back in December in the <a href="http://www.washingtontimes.com/news/2011/dec/19/congress-plays-charades-with-insider-trading/">Washington Times </a>and in a <a href="http://reason.org/blog/show/senate-approves-lawmakers-insider-t">blogpost</a> last week highlighting the desperation of Congress to regain the public&rsquo;s trust. Co-sponsor of the STOCK Act, Rep. Tim Walz (D-MN) said that hepatitis would be more popular than congress if the Act wasn&rsquo;t passed.</p>
<p class="MsoNormal">Despite passing in both bodies of Congress, the STOCK Act must once again pass in the Senate as two major provisions were removed from the version originally passed in the Senate last week. One of the provisions requires that professionals who sell non-public information relating to legislation and rule-making to hedge funds and investors, so-called political intelligence, must register with the government like lobbyists. It was part of the original House bill, but is now nixed. The other provision, which &ldquo;prohibits undisclosed "self-dealing" by state and federal public officials to ensure that officials cannot secretly act in their own financial self-interest at the expense of the public, and in violation of existing ethics rules and regulations,&rdquo; was added as a rider by Sens. John Cornyn (R-TX) and Patrick Leahy (D-VT). It had been proposed on its own, but was snuck into the STOCK Act last minute because of the bill&rsquo;s absolute certainty of passage. Both were removed by the House under the leadership of Rep. Eric Cantor (R-VA).</p>
<p class="MsoNormal">Though on the surface the latter provision may appear a worthwhile law, Joe Luppino-Esposito of the Heritage Foundation provides an<a href="http://blog.heritage.org/2012/02/01/senates-public-corruption-move-raises-overcriminalization-concerns/"> insightful analysis</a> to the contrary. He concludes:</p>
<p class="MsoNormal">&ldquo;As appealing as it might sound to give members of Congress a taste their own medicine, this proposed amendment would have a more devastating, far-reaching effect on all elected officials, and in some cases private citizens, at all levels.&nbsp; The amendment is a textbook case of overcriminalization: over-reaching federal criminalization, unclear terms, and inadequate criminal intent language.&rdquo;</p>
<p class="MsoNormal">The rest of the STOCK Act has been kept more or less the same, although some of the language has been changed to include securities other than just equities and swaps as the original bill had intended. A provision preventing Congress and their staff from participating in IPOs premarket was also added. The so-called Pelosi provision was aptly named in regards to Rep. Nancy Pelosi&rsquo;s (D-CA) husband&rsquo;s participation in Visa&rsquo;s IPO in the spring of 2008. It coincidentally occurred around the same time as legislation curbing credit-card swipe fees. Never mind that Pelosi&rsquo;s husband is a multi-millionaire financier who has participated in multiple previous IPOs and is a long-term investor &ndash; not a trader. The fact that the legislation and the IPO coincided with one another is pure coincidence. The idea that Nancy Pelosi acted on inside information through her husband&rsquo;s investment is absurdly ridiculous. I am not one to ever defend Pelosi, but this is blatant political maneuvering.</p>
<p class="MsoNormal">Rep. Walter Jones (R-NC) called the Pelosi provision &ldquo;absolutely unacceptable&rdquo; and &ldquo;petty.&rdquo;</p>
<p class="MsoNormal">Representative Jones should have included the entire STOCK Act in his comment, because that&rsquo;s about the best summation of the whole legislation. Americans shouldn&rsquo;t welcome this new law (it will sail through the Senate and Obama will sign it in a heartbeat) as progress, nor a sign of Congressional efficiency, nor an occasion to restore trust in Congress. They should see it merely as a giant waste of time, a distraction from the real issues Congress should be dealing with, and a shining example of the spectacle that is American Politics.</p>1012607@http://www.reason.orgFri, 10 Feb 2012 15:53:00 ESTjames.groth@reason.org (James Groth)Senate Approves Lawmakers Insider Trading Ban. Whatever.http://www.reason.org/blog/show/senate-approves-lawmakers-insider-t
<p>&nbsp;</p>
<p class="MsoNormal">After a &ldquo;60 Minutes&rdquo; report brought to the attention of the American public that Congress was capitalizing on non-public information, lawmakers quickly collaborated with one another and proposed two bills banning insider trading by members of Congress and their staff. One in the House and one in the Senate. The House bill had floated around for six years largely ignored until it was immediately embraced by 270 House members the week after the public became informed.&nbsp; The Senate bill took about two weeks to craft following the &ldquo;60 Minutes&rdquo; report. Isn&rsquo;t it amazing how quickly our representatives can act when the issue threatens their lives and jobs?</p>
<p class="MsoNormal">This whole hoopla over Congressional insider trading is a non-issue. I wrote an<a href="http://www.washingtontimes.com/news/2011/dec/19/congress-plays-charades-with-insider-trading/"> op-ed in the Washington Times</a> about this bill being largely a public relations campaign, a sorry and despicable attempt by members of congress to regain America&rsquo;s trust by drafting and passing a law that at first glance looks like our representatives protecting our interests, but in reality accomplishes next to nothing and may even disrupt existing insider trading laws.</p>
<p class="MsoNormal">Congress has a public approval rating below 15 percent, and this bill reeks of desperation.</p>
<p class="MsoNormal">One of the creators of the Senate bill, Sen. Scott Brown, Massachusetts Republican, had this to say:</p>
<p class="MsoNormal" style="padding-left: 30px;">"We can send the message to the American people that we're trying to re-establish the trust that seems to have been lost with them, and who knows, maybe we'll be in double figures in terms of the approval rating pretty soon."</p>
<p class="MsoNormal">Co-sponsor of the House bill, Rep. Tim Walz, Minnesota Democrat, had this to say:</p>
<p class="MsoNormal" style="padding-left: 30px;">"If this thing doesn't move and doesn't happen, hepatitis will be more popular than the U.S. Congress, I can guarantee you that.&rdquo;</p>
<p class="MsoNormal">The only thing that was accomplished throughout this lawmaking process was media time for our representatives to return to the pulpit, clamor to regain our trust, and most importantly, waste our time while not devoting much needed attention to real issues like deficit reduction, tax reform, a slew of government housing issues, relentless money printing, and the list goes on.</p>
<p class="MsoNormal">At least some sense came from one Congressman who voted no to the legislation. Sen. Tom Coburn, Oklahoma Republican, had this to say:</p>
<p class="MsoNormal" style="padding-left: 30px;">&ldquo;The assumption here is that some of our colleagues are doing insider trading on the stock market. Nothing could be further from the truth. The real insider trading is the horse-trading that goes on in this body that is not always in the best interest of the country.&rdquo;</p>
<p class="MsoNormal">Well said.</p>
<p>&nbsp;</p>1012581@http://www.reason.orgFri, 03 Feb 2012 11:01:00 ESTjames.groth@reason.org (James Groth)South Carolina: The State that Booed the Golden Rulehttp://www.reason.org/blog/show/sc-booed-golden-rule
<p>As the post-mortem analysis of the South Carolina Republican presidential primary is written and we look ahead to the first Republican debate in Florida tonight, the thing that sticks with me most vividly from the South Carolina campaign was the reaction of the crowd in the Fox News debate, particularly when many in the audience booed Rep. Ron Paul for offering the notion of applying the Golden Rule to our nation's foreign policy.</p>
<p>Just to recap, the candidates had been discussing foreign policy and Iran. Newt Gingrich had just offered some false bravado and empty rhetoric about killing terrorists. Paul then tried to inject a little sanity about not carelessly beating the war drums. Following the crowd's boos, Mitt Romney, Rick Santorum, and Rick Perry then engaged in a pissing contest to demonstrate who among them was the most macho warmonger.</p>
<p>To the crowd's credit, they did cheer Paul 30 seconds after the initial boos when he finished his reply by imploring the country to bring the troops home and not delve into yet another needless war, saying, "This country doesn't need another war [with Iran]. We need to quit the ones we're in. We need to save the money and bring our troops home."</p>
<p>
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<p>This exchange brought two thoughts immediately to mind. First, it reminded me of a similar exchange from a presidential exchange four years earlier, also in South Carolina, in which Paul and Rudy Giuliani got into a heated exchange over U.S. foreign policy and the war in Iraq. Giuliani acted incredulous that Paul had the temerity to suggest that our foreign policies, specifically, over 50 years of meddling in the Middle East, have had unintended&mdash;and, oftentimes, negative&mdash;consequences. Giuliani's response was greeted with wild cheers from the audience. Paul then schooled Giuliani and the others in attendance and those viewing the debate on our history of interventionism in the Middle East (namely, the U.S.-orchestrated coup d-&eacute;tat of the democratically-elected government of Iran in 1953 which installed<strong> </strong>Mohammad Reza Shah Pahlavi and ultimately led to over a quarter-century of the Shah's brutal rule over the Iranian people) and the concept of "<a href="http://en.wikipedia.org/wiki/Blowback_%28intelligence%29">blowback</a>," which is described on Wikipedia as "the espionage term for unintended consequences of a covert operation that are suffered by the civil population of the aggressor government."</p>
<p>
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<p>I have since read many accounts of people, even former hardened neoconservatives, who, as a result of that exchange and further study, have since adopted noninterventionist foreign policy views based on Paul's simple wisdom that we, as a nation, should not treat others in a manner in which we would not like to be treated. One does not have to be religious to acknowledge that the Golden Rule offers a simple and sound moral code of conduct. It applies as well to international relations as it does to personal relations.</p>
<p>Some of the Republican presidential candidates have noticed that the phrase "American exceptionalism" plays well with Republican audiences, and they tend to use it every opportunity they get. They generally misinterpret the term to mean that not only is American society (by which they really mean American <em>government</em>) the best in the world, but that this somehow gives us the moral right to act in ways that other societies and nations cannot. America is an exceptional nation, but it has come to be that way because of the ideals of freedom and opportunity that it has embodied, and its willingness to lead by example, not by throwing its weight around and imposing its notions of the way people should live their lives on other societies and nations. Regrettably, it has strayed from that path and must rededicate itself to embodying the principles of individual liberty, prosperity, and, yes, peace, if it is to once again be considered that "shining city upon a hill."</p>
<p>Returning to the recent South Carolina debate, and the crowd's reactions, my second thought was of the sheer bloodlust displayed by members of the audience. It was like a feeding frenzy of war propaganda. It recalled to me Mark Twain's poignant short story, "<a href="http://classiclit.about.com/library/bl-etexts/mtwain/bl-mtwain-war.htm">The War Prayer</a>." (Apparently, the same thought occurred to Laurence Vance, who wrote an excellent <a href="http://lewrockwell.com/vance/vance275.html">article</a> for LewRockwell.com on the same topic.) It is the story of a church congregation implored by its minister to pray for their nation's troops during a time of war. After the preacher's passionate sermon, an elderly stranger makes his way up the main aisle to the front of the church and announces to the congregation that what has just been uttered is only half of the prayer that has truly been made. He then proceeds to lay bare the horrors of war and the unspoken payer that they have also necessarily intended.</p>
<p style="padding-left: 30px;"><br /> <em>"You have heard your servant's prayer&mdash;the uttered part of it. I am commissioned by God to put into words the other part of it&mdash;that part which the pastor, and also you in your hearts, fervently prayed silently. And ignorantly and unthinkingly? God grant that it was so! You heard these words: 'Grant us the victory, O Lord our God!' That is sufficient. The whole of the uttered prayer is compact into those pregnant words. Elaborations were not necessary. When you have prayed for victory you have prayed for many unmentioned results which follow victory-must follow it, cannot help but follow it. Upon the listening spirit of God the Father fell also the unspoken part of the prayer. He commandeth me to put it into words. Listen! </em></p>
<p style="padding-left: 30px;"><em>"O Lord our Father, our young patriots, idols of our hearts, go forth to battle&mdash;be Thou near them! With them, in spirit, we also go forth from the sweet peace of our beloved firesides to smite the foe. O Lord our God, help us to tear their soldiers to bloody shreds with our shells; help us to cover their smiling fields with the pale forms of their patriot dead; help us to drown the thunder of the guns with the shrieks of their wounded, writhing in pain; help us to lay waste their humble homes with a hurricane of fire; help us to wring the hearts of their unoffending widows with unavailing grief; help us to turn them out roofless with their little children to wander unfriended the wastes of their desolated land in rags and hunger and thirst, sports of the sun flames of summer and the icy winds of winter, broken in spirit, worn with travail, imploring Thee for the refuge of the grave and denied it&mdash;for our sakes who adore Thee, Lord, blast their hopes, blight their lives, protract their bitter pilgrimage, make heavy their steps, water their way with their tears, stain the white snow with the blood of their wounded feet! We ask it, in the spirit of love, of Him Who is the Source of Love, and Who is ever-faithful refuge and friend of all that are sore beset and seek His aid with humble and contrite hearts. Amen."</em></p>
<p style="padding-left: 30px;"><em>(After a pause)</em></p>
<p style="padding-left: 30px;"><em>"Ye have prayed it; if ye still desire it, speak! The messenger of the Most High waits."</em></p>
<p style="padding-left: 30px;"><em>It was believed afterward that the man was a lunatic, because there was no sense in what he said.</em></p>
<p>Let us hope that tonight's debate&mdash;and the remainder of the presidential campaign&mdash;will be characterized by greater reflection and civility, and that the candidate's views will be better informed by a respect for life (may they be as staunchly "pro-life" in international matters as they claim to be in domestic matters) and liberty.</p>1012542@http://www.reason.orgMon, 23 Jan 2012 18:44:00 ESTinfo@reason.org (Adam Summers)Surveying the State of Global Freedomhttp://www.reason.org/news/show/surveying-the-state-of-global-freed
<p>In the Coke Zero commercial, an impatient young man says, "It's 2010. Weren't we supposed to have time machines by now?" Human rights supporters have equal cause to ask, "Weren't we all supposed to have democracy by now?"</p>
<p>In 1992, after the collapse of the Soviet empire, Francis Fukuyama wrote that "for a very large part of the world, there is now no ideology with pretensions to universality that is in a position to challenge liberal democracy, and no universal principle of legitimacy other than the sovereignty of the people." A host of despots, however, has managed just fine without a universal principle.</p>
<p>The world is freer and more democratic than it was then. But advances have been stymied by dozens of repressive regimes. The human rights group Freedom House said in January that the previous four years made up "the longest continuous period of deterioration" in the nearly 40 years it has kept tabs. This year brought no evident turnaround.</p>
<p>That is fine with the rulers of China. Liu Xiaobo was awarded the Nobel Peace Prize for his efforts to advance democracy and free speech, which had also earned him an 11-year prison term. The December event was the first time neither the winner nor his representative was allowed to attend since 1935, when the Nobel Committee honored a dissident in Nazi Germany.</p>
<p>In North Korea, the ailing Kim Jong-il installed his son Kim Jong-un as heir apparent&mdash;proving that Marxism can coexist with monarchy. A former Nobel Peace Prize laureate, Burma's Aung San Suu Kyi, was released from seven years of house arrest after her jailers won elections that were widely denounced as rigged.</p>
<p>A secret Pentagon cable published by WikiLeaks said Defense Secretary Robert Gates told his French counterpart that "Russian democracy has disappeared." Elections in Belarus were not free enough to deprive re-elected President Alexander Lukashenko of his claim to be the last dictator in Europe.</p>
<p>The American effort to spread democracy in the Middle East and Muslim world encountered fierce headwinds. Afghan President Hamid Karzai took over an election commission after it had the nerve to find rampant irregularities in the election he won last year. Unhappy with the U.S. government, he told the American ambassador, "If I had to choose sides today, I'd choose the Taliban."</p>
<p>Iraq held elections that didn't produce a new government until nine months later, during which time authorities banned political demonstrations. In Egypt, the opposition Muslim Brotherhood went from 88 seats in parliament to one. "At least get creative in how you rig the elections," one newspaper publisher implored President Hosni Mubarak, who has been in power for 29 years.</p>
<p>On the other side of the globe, 85 percent of Venezuelans said they don't want their country to resemble communist Cuba. But President Hugo Chavez nationalized hundreds of businesses, closed down the last remaining opposition TV station, and expelled a member of the European Parliament for calling him&mdash;I am not making this up&mdash;a "dictator."</p>
<p>Retired Cuban autocrat Fidel Castro, meanwhile, admitted the communist economic model "doesn't even work for us anymore." The number of political prisoners in Cuba fell to the lowest level since 1959.</p>
<p>Haiti suffered a horrendous earthquake, a cholera epidemic and a chaotic national election spoiled by violence and fraud. Nicaraguan President Daniel Ortega made it plain he will run for re-election in 2011 even though the Constitution forbids him from seeking another term.</p>
<p>In Africa, there are modest signs of progress. The number of coups on the continent fell by more than half in this decade compared to the one before, and 48 countries were scheduled to go to the polls this year.</p>
<p>Successful, credible votes took place this year in Tanzania and Somaliland. Guinea's military junta yielded to civilians after the country's first democratic election.</p>
<p>But many exercises in democracy were a sham. Sudanese President Omar al-Bashir, wanted by the International Criminal Court on war crimes charges, won after warning that if international poll watchers caused trouble, "we will cut off their fingers." The president of Ivory Coast lost a November election but has refused to step down, raising the specter of renewed civil war.</p>
<p>This year served mainly to vindicate the desires of tyrants and the fears of pessimists. To recapture the sense that the world is destined for universal democracy, you'd need a time machine.</p>
<p><strong>COPYRIGHT 2010 CREATORS.COM</strong></p>1011006@http://www.reason.orgFri, 23 Dec 2011 07:00:00 ESTschapman@tribune.com (Steve Chapman)Congress Plays Charades with Insider Tradinghttp://www.reason.org/news/show/congress-plays-charades-with-inside
<p>Congress&lsquo; approval rating hit another historic low when a recent Gallup poll found 76 percent of registered voters think congressional incumbents don&rsquo;t deserve re-election. That&rsquo;s the highest percentage in the 19 years Gallup has asked the question.</p>
<p class="MsoNormal">So what&rsquo;s Congress&lsquo; plan to turn things around? Run a public relations campaign, of course. Its most recent effort comes in the form of the Stop Trading on Congressional Knowledge (STOCK) Act - a bill that&rsquo;s been in the making for six years but recently got a big push after a &ldquo;60 Minutes&rdquo; investigation raised serious questions about the success some members of Congress have had buying and selling stocks while in office.</p>
<p class="MsoNormal">The STOCK Act is supposed to ban members of Congress from insider trading. The trouble is, Congress is already subject to the same insider trading laws that apply to everyone else. The STOCK Act is just a feel-good law aimed at improving Congress&lsquo; tattered image. And if anything, the bill creates problematic loopholes by too narrowly focusing congressional insider trading laws on pending legislation, thus excluding information obtained in hearings and meetings. Just as troubling, what should have been the obvious financial targets for the law, such as stock options and real estate holdings, aren&rsquo;t even covered in the STOCK Act.</p>
<p class="MsoNormal">STOCK&rsquo;s current language, as introduced in the House, merely makes it clear that insider trading laws apply to Congress and requires members and their staffs to report financial transactions within 90 days instead of annually. A Senate panel has passed a version requiring lawmakers to disclose their stock trades of more than $1,000 within 30 days.</p>
<p class="MsoNormal">At a recent Financial Services Committee&rsquo;s STOCK Act hearing, Rep. Stevan Pearce, New Mexico Republican, asked the Securities and Exchange Commission&rsquo;s enforcement director, &ldquo;Would you take this legislation and go to work on members of Congress who have been getting by with things?&rdquo;</p>
<p class="MsoNormal">&ldquo;No. I don&rsquo;t think that&rsquo;s the case,&rdquo; replied Robert Khuzami, the SEC&rsquo;s chief enforcer.</p>
<p class="MsoNormal">That&rsquo;s because the STOCK Act is just theater, not good governance. This bill might make Congress look like it got something done, but it won&rsquo;t stop many of the trades Congress has been making. To prevent members of Congress and their staffs from cashing in on their positions while in office, a law needs to require them to report all financial transactions in real time, on the date they are made and prevent them from capitalizing on any nonpublic information they receive from any source gathered in the course of their public service.</p>
<p class="MsoNormal">The proposed STOCK Act has enough loopholes to drive a truck through. A simple fiduciary duty law that covers all financial vehicles and transactions - stocks, real estate, derivatives, etc. - would be more likely to protect taxpayers&rsquo; interests. This law would be better able to spot Congress&lsquo; dubious financial deals because it includes all avenues by which members are able to use their privileged positions to enrich themselves, and it immediately shares the details of the members&rsquo; financial activity.</p>
<p class="MsoNormal">To give the law some teeth and make members of Congress think twice about using their positions to get rich, the SEC or the Justice Department must commit to forming an independent unit actively monitoring congressional stock activity and prosecuting offenders, which isn&rsquo;t happening now.</p>
<p class="MsoNormal">While Congress skates by, consider that Comcast CEO Brian L. Roberts was just fined $500,000 by the Justice Department for failing to report stock purchases. Could it be trusted to levy similar charges against one of its own? Will the government actually police what Congress is doing or will it continue to let the fox guard the henhouse?</p>
<p class="MsoNormal">For six years, the STOCK Act sat idle, practically unknown by many members of Congress. Now it has more than 220 co-sponsors who don&rsquo;t seem to be concerned with whether it actually solves any problems. If members want to try to fool the public while continuing their curious financial dealings, this is the bill for them. But if members of Congress are truly intent on preventing their own from trading on their influence and benefiting financially from their positions, the STOCK Act isn&rsquo;t the answer.</p>
<p class="MsoNormal"><em>This article first appeared in <a href="http://www.washingtontimes.com/news/2011/dec/19/congress-plays-charades-with-insider-trading/">The Washington Times </a>on December 19, 2011</em></p>1012597@http://www.reason.orgTue, 20 Dec 2011 15:00:00 ESTjames.groth@reason.org (James Groth)Keeping Newt Undercoverhttp://www.reason.org/news/show/keeping-newt-undercover
<p>It takes hard work to evoke sympathy for Iran&rsquo;s odious regime. But Newt Gingrich and his fellow GOP presidential maybes proved up to the task during their recent South Carolina debate. The cheerful casualness with which they talked about deploying covert operations against Iran will make it much harder for America to win friends and influence people to achieve its foreign policy objectives.</p>
<p>Mitt Romney got the ball rolling by declaring that, if all else failed, he would resort to military action to prevent Iran from acquiring nuclear weapons. But such generic bromides were not good enough for Newt Gingrich. After accusing the Obama administration of being dumb about Iran, the former House speaker proceeded to say just about the dumbest thing of the night&mdash;and arguably the entire debate season. (Yes, even dumber than Rick Perry&rsquo;s now-immortal &ldquo;Oops&rdquo;). &ldquo;We need maximum covert operations to block and disrupt the Iranian program, including taking out their scientists, including breaking up their systems,&rdquo; this alleged brainiac opined. &ldquo;All of it covertly, all of it deniable.&rdquo;</p>
<p>Gingrich obviously doesn&rsquo;t believe he&rsquo;ll become president, his post-debate poll bump notwithstanding. If he did, he wouldn&rsquo;t put himself in the position of having to deny in office something that he had already admitted he&rsquo;d do if elected. In any event, everything he listed (all of which Rick Santorum enthusiastically echoed) has already been done. So what exactly is his beef with the Obama administration? The only clear difference is that it is better at maintaining plausible deniability than loudmouth Gingrich.</p>
<p>The reality, of course, is that Gingrich has as much chance of becoming president as Dick Cheney has of winning the Nobel Peace Prize. But that doesn&rsquo;t mean he can&rsquo;t do Cheney-worthy damage to America&rsquo;s interests and standing in the world.</p>
<p>Having grown up in the heyday of the Cold War in the economic basket case that was India, I know firsthand just how useful America&rsquo;s allegedly satanic ways are for failing regimes looking for scapegoats. Indeed, there was literally no problem too big or too small that India&rsquo;s rulers at the time wouldn&rsquo;t blame on the &ldquo;foreign hand&rdquo;&mdash;code for CIA. Communal riots between Hindus and Muslims? Foreign hand. Rising oil prices and inflation? Foreign hand.</p>
<p>The foreign hand, as Salman Rushdie once put it in a <em>Reason</em> <a href="http://reason.com/archives/2005/08/01/the-iconoclast">interview</a>, was the Pynchonesque conspiracy that explained almost every ill in the non-Western world. But the power of this trope was dying, thanks to overuse. However, Gingrich &amp; Co.&rsquo;s loose advocacy of covert operations will make the world even more paranoid about America&rsquo;s intentions. And many regimes fighting for their survival&mdash;whether the new ones in the Middle East or the old ones in Pakistan&mdash;will be tempted to pull out the foreign hand from the dustbin of history. Even before Gingrich gave them ammunition, Pakistan&rsquo;s major newspaper, the <em>Islamabad Times</em>, was fretting about many of its NGOs really being spying operations for the United States. &ldquo;These agents became active in gathering intelligence, creating instability, anarchy and terrorism in Pakistan and China,&rdquo; it editorialized in October.</p>
<p>The Republican debates might be targeted at a domestic audience, but the rest of the world doesn&rsquo;t shut its ears. They offer other countries a window on the American psyche. And the picture that Gingrich et al. are painting would only confirm the stereotype of an ugly American willing to achieve his ends by any means necessary, long-term consequences be damned.</p>
<p>And America&rsquo;s inglorious history of covert operations shows just how nasty these consequences can be. Nothing demonstrates this better than Iran itself. America had a hand in creating this monster by first helping the Shah oust&mdash;through covert means&mdash;Prime Minister Mohammad Mossadegh in 1953, and then arming him as he erected a pro-U.S. police state that brutalized his own people. All of this paved the way for an even more oppressive Islamist regime that Republicans now want to destabilize by using even more covert operations. But is there any guarantee that this time we&rsquo;ll get a nuclear-free, U.S.-friendly, Western-style democracy?</p>
<p>Few would deny that covert operations can sometimes offer an alternative short of all-out war to deal with nettlesome situations that can&rsquo;t be resolved diplomatically. But precisely because they involve morally ambiguous means and, often, serious trespasses on another nation&rsquo;s sovereignty, they have to be deployed sparingly and responsibly&mdash;i.e., only when they offer the least bloody way of advancing a just cause.</p>
<p>Gingrich, however, sounds like a sociopath when he talks about them. He makes it seem like covert operations are just another tool in America&rsquo;s foreign policy kit, to be pulled out whenever expedient. That makes America, not Iran, seem like the bigger threat to global stability.</p>
<p>The negative repercussions of this for America&rsquo;s foreign policy objectives cannot be overstated. It takes the moral high ground out from under pro-American voices advocating closer ties between their countries and the U.S. Without them, America can&rsquo;t conduct effective diplomacy, leaving brute force as its main option when major disputes arise.</p>
<p>Newt Gingrich is not presidential material. However, he could be a candidate for some prominent foreign policy-related Cabinet position in the event of a Republican victory next November. But America doesn&rsquo;t need a Dr. Strangelove to deal with Iran&rsquo;s mad mullahs.</p>
<p>Gingrich has a habit of self-destructing. Let&rsquo;s hope he does so before he destroys any more of America&rsquo;s credibility.</p>
<p><em>Reason Foundation Senior Analyst is a columnist at</em> The Daily <em>where this column <a href="http://www.thedaily.com/page/2011/11/17/111711-opinions-column-newt-iran-dalmia-1-2/"> originally appeared</a>.</em></p>1012490@http://www.reason.orgTue, 22 Nov 2011 11:36:00 ESTshikha.dalmia@reason.org (Shikha Dalmia)Getting Past the Emotional Gripes to the Real Debates About Inequalityhttp://www.reason.org/blog/show/get-past-emotion-for-ows-debate
<p>While the Occupy Wall Street movement is often criticized for not having concrete goals, there are several clear categories the gripes fall into. Complaints about crony capitalism are completely understandable. Demonization of corporations is a missed target, the fewer opportunities those with money have to manipulate the regulatory system the better. But where the logic falls completely apart is over the host of claims related to income inequality/wealth inequality.</p>
<p>A video put together by the Center for American Progress a few weeks ago demonstrates many of these logical inconsistencies. The arguments are often emotive, and play on populist rhetoric to make some sharp claims. But when you break a lot of this down, I think the debates are really misplaced. The lack of perfect logic here is not to suggest that nothing is wrong in America&mdash;in fact there is a lot wrong. And the instincts of most Americans pick up on this. But if we're going to have the right solutions we have to properly understand the problems. Here is a breakdown of some of the CAP video arguments (the whole video is at the end):</p>
<ul>
<li><strong>"1% has 40% of the wealth"</strong></li>
</ul>
<p>To start, we should note the difference between wealth inequality and income inequality. Even if everyone in America had the exact same income, individuals would do all sorts of different things with it. Some might spend, others save, and still others directly invest. Some of those investments would succeed and others would fail. To talk about the problem of too much wealth concentrated among the few is to demand equality of outcomes instead of equality of opportunity (which is fine to argue, but then we're into a capitalism vs. socialism discussion). If everyone had the same income to start and ultimately 1 percent of those people wound up with 40 percent of the aggregate wealth over time, would that be an inherently bad thing? No. The deeper issue is how that comes about&mdash;whether or not the 1 percent have achieved their wealth through nefarious practices. And that would be a problem whether or not there was equal income in the first place. (This hypothetical also assumes a fixed pie of wealth, which would certainly not be the case since there is no fixed pie of wealth.)&nbsp;</p>
<p>When discussing <em>wealth</em>&nbsp;inequality, one could complain that the&nbsp;financial industry has manipulated the regulatory system and benefited from access to subsidized capital (FDIC, Fed discount window, better borrowing rates than smaller institutions from TBTF status, etc.) and suggest that the wealth derived from financial activities in the past would not be as substantial without these public benefits. Therefore the wealth gap was widened through a non-capitalist flaw. One could also note barriers to entry in the legal community (bar association, occupational licensing requirements) drive up the cost of legal services and increase the wealth of lawyers beyond what it otherwise might be. Similarly, problems with the lack of&nbsp;transparency in costs in the medical industry mean that medical professionals make more money than they might otherwise, increasing their contribution to the wealth gap.&nbsp;</p>
<p>So there are a range of government policy choices (whether you like them or not) that wind up distorting the ultimate wealth that can be achieved in various businesses away from where it would otherwise be. This doesn't necessarily make a value statement on those policy choices, but does suggest where the debate should go if you want to talk about <em>wealth</em>&nbsp;inequality.&nbsp;Consideration of how state, local, and federal rules influence wealth distribution becomes the more pertinent question, rather than just supposing there is an arbitrary size of the wealth pie (40 percent? 30 percent? 20 percent?) that is some how the objective max that any one percentage of the population should have before incurring the wrath of "the others."</p>
<p><em>Takeaway:</em>&nbsp;There is nothing logically objectionable about the actuality of 40 percent of national wealth concentrated amongst 1 percent of the population; what could be objectionable is the nature of that wealth gap. I've listed some contributors to the wealth gap that have actionable steps to be addressed&mdash;let's hear about some other <em>causes</em>&nbsp;of wealth inequality. Then there can be a debate. You can't debate a benign number.</p>
<ul>
<li><strong>"In the past decade, most of the financial gains in the country have gone to the top 1%"</strong></li>
</ul>
<p>Logically, as the economic pie expands, if a majority of the gains go to a select group in society it does not say anything inherently positive or negative about the gains that go to the rest of society. Again, it is not the condition itself that should be discussed in a vacuum, as is frequently done in OWS marches, but the causes of the perceived problem. Is this majority of gains flowing to the top 1 percent because the top 1 percent just did way better in developing investments than the rest? Is it because wealth necessarily grows exponential the more that you have if you manage it well (i.e. It is easier to make money investing in equities with $100,000 than $100, so those at the higher echelons of wealth will necessarily be able to growth their wealth faster than those at the bottom)? Is it because bank licenses provide limited liability, allowing financial institutions to grow to gigantic sizes they never would have reached without the benefit of public support ultimately leading those financial institutions to beating down everyone in their path and generating massive amounts of wealth? Those are different scenarios (that are not necessarily mutual exclusive), and lead to different policy responses (or non-responses). They are causes that can be measured, debated, and addressed. Is there an objectively proper amount of financial gains that should flow to any particular percentage of the population?</p>
<p>Suppose much of the wealth that was generated in the past decade came from non-productive activities like high frequency trading picking up half-a-cent margins on rapid trades identifying nano-second arbitrage opportunities. While one could debate whether or not this has harmful effects or takes up talent that could otherwise be predisposed to something bringing more value to society, it does not necessarily reduce the wealth growth of others. Think of this as whip cream on the pie. It still counts as part of the pie, but whether or not it is there doesn't impact much of the nature of the rest of the pie. Theoretically the 1 percent could gain 90 percent of the wealth over a 10 year period, but if 40 percent of that wealth is from activities that created wealth that never would have existed anyway, then the 99 percent are not directly injured, even though they don't share in what was created. In this way the wealthy individuals in America didn't prevent others from generating wealth as much as they generated <em>more than</em> others. To complain about that is to lapse into plain old jealousy and envy. Instead, it is beneficial to concentrate on what tangible things, policies, laws, etc. contribute to where financial gains flow. Figuring out whether these are good or bad is a critical question when considering the efficacy of this statement that a majority of financial gain went to a particular percentage.&nbsp;</p>
<ul>
<li><strong>"Median income has decreased in the last decade"</strong></li>
</ul>
<p>This is true, according to the Census Bureau (<a href="http://www.census.gov/hhes/www/income/data/historical/household/" target="_blank">see table H-8</a>). From 2001 to 2010, Census reports median income fell from $52,005 to $49,445, adjusted for inflation (using CPI, in 2010 dollars). Of course this is somewhat of an arbitrary measuring point. If you were to measure from 12 years ago, the decrease would be worse, down from $53,252. Though if you chose to measure two decades back, you'd find median income has increased from $47,032 in 1991. What is the broader point. Well, like the story so far, the important thing to discuss what has caused this to happen. The dot-com bubble making millionaires out of previously lower income tech nerds contributed to median income being the highest in 1999-2000. It would make sense to see it fall in the aftermath of the 2001 recession, then peak again in 2007, only to fall once more in the current recession. Does the present state of median income actually say anything about the past decade? While median income has risen over the past few decades does that fact inherently suggest it should keep going?</p>
<p>If we've hit a technology plateau and picked much of the low hanging fruit from the American economy, then we should expect the structural problems in our labor market and capital markets to prevent continued growth in the median income. If this diagnosis were to be correct, it would suggest where the debate over how to address economic woes should take place. And it would yield much different policy results than might be suggested by supposing the wealthy are putting intentional downward pressure on the middle class.</p>
<ul>
<li>&nbsp;"<strong>The wealth gap has grown 20% since the 1980s"</strong></li>
</ul>
<p>Again, this is inherently not a problem. The CAP video makes this argument. If you're already geared up to believe the wealthy are taking too much in society you'll see this as a bad thing. If you're looking at the statement from a logically indifferent perspective, the response would be, <em>so what</em>? When making an statement like this and then presuming the conclusion is "therefore this is bad" the argument falls apart because there is a missing theorem: what caused this gap and is that cause a bad thing?&nbsp;There is a need for more diagnostics in this debate. If a dozen diseases can have similar symptoms we can't just focus on the symptoms. Or even assume the symptom is an indication that something is wrong.&nbsp;</p>
<ul>
<li><strong>"The American Dream is that you can work hard, play by the rules, and you can get ahead. That is the essence of mobility. But social mobility is down."</strong></li>
</ul>
<p>No, that is not the American Dream. That is to suggest that the American Dream is everyone always wins, all the time. No one ever promised that every entrepreneurial idea would succeed. In fact, most small business ideas don't take off. The American Dream is that you can pick yourself back up. That there is always opportunity. The reason that libertarians complain about oppressive regulations (not all laws) and occupational licencing is because those things limit opportunity. They often fly in the face of the American Dream.&nbsp;</p>
<p>The nature of the American Dream is that if you succeed you can get ahead, and it is not necessarily at the expense of others. This statement in the CAP video is to suggest that those in the 1 percent are many who have achieved the American Dream. They have gotten ahead. That doesn't necessarily mean they've kept everyone else down. If everyone were to achieve the wealth status of those in the 1 percent (minimum of around $500,000 a year) then the 1 percent would just be some higher figure. If the American Dream is that you get ahead while pushing others back, then why would anyone want to support the American Dream?</p>
<p>The reality is that labor mobility is down because both progressive and conservative ideals have promoted homeownership as an investment all should have. This <a href="http://reason.org/search/results/?cx=000107342346889757597%3All4jwmwz-2e&amp;cof=FORID%3A11&amp;q=household+debt&amp;sa=GO&amp;siteurl=reason.org%2F" target="_blank">has encouraged debt</a>. This has families weighed down by bills and unable to take advantage of opportunities. This has households unable to sell a home and move to a new place where there is work. This distorted view of the American Dream, that you can have it all quickly without having to work for it and there will never be problems, that is something that has contributed to the mess of today. &nbsp;</p>
<ul>
<li>
<p style="display: inline !important;"><strong>"The gap between wealthy and middle class has been growing, and it has become harder for those in middle class to break into the top"</strong></p>
</li>
</ul>
<p>These things are not logically consistent. Was it ever easy for the middle class to move into the upper class? Were the poor once easily mobile but now something is drastically different? There has always been a tough road for moving between classes of wealth. Such a statement needs to be quantified with causes, and it should not assume that the goal of individuals in society is to try and move up the wealth ladder. Sure, most people wouldn't mind more income and more wealth, but a lot of people are able to live happy, content, and full lives in wealth classes that are not the elite. There is a lot of assumption and little causal evidence to link some of these ideas together.</p>
<ul>
<li><strong>"1500 millionaires paid no income taxes in 2009; the average tax rate for wealthy has fallen; and the wealthy get a tax break on dividends"</strong></li>
</ul>
<p>Okay, so the tax code is broken. Let's fix it. All for that.</p>
<p>But before we move on, let's dig into this a bit. First, 1,500 millionaires is less than 1 percent of all millionaires in America. It may or may not be a problem, but in either way it is a low enough number to be statistically insignificant.</p>
<p>Second, to argue there is a tax break on dividends (as is done in the CAP video) is to suggest there is an inherently proper rate they should be. And what might that rate be? (Hint:&nbsp;the answer can not be "well because these other things are being cut" since that is not logically connected, just selectively attached.)&nbsp;From one perspective dividends are double taxed because after they are taxed and added to personal income they get taxed again. Even if one rejects this argument on some objective tax policy grounds (not appealing to social values), the 2003 tax law that changed dividend taxes only reduced them to the rate of capital gains taxes for most taxpayers. Is there something inherently different between dividends and capital gains such that they should be taxed differently? Unless this can be shown, it is inappropriate to argue there is a tax break on dividends.</p>
<p>The nature of this debate, though, gets at a deeper issue, one that should be addressed in comprehensive tax reform: <em>on what grounds should anyone pay any taxes?</em> Is the taxing of income the most equitable way to tax in society? Is there any connection between taxing income and paying for public services? Is it just an easy thing to tax that we've gotten used to. Maybe it is the best way to tax, maybe not. But it shouldn't be assumed that is the proper way to tax without a fundamental argument to back up that position.</p>
<p>That said, the sense that it is unfair that some have been able to escape taxation while others pay taxes is understandable. I share the frustration. The tax code is unjust, it is complicated, it distorts the use of resources, it grants political favors. But this sense of frustration should not lead to one of envy and rage,&nbsp;but rather to disgust in the political system for allowing for this to happen.</p>
<ul>
<li><strong>"We should stop tax breaks for people who ship jobs overseas"</strong></li>
</ul>
<p>There is nothing illegal about using foreign labor, and American businesses try to get foreign companies to come to our shores all the time. Global competition. Should we reject other people shipping their jobs to us? This idea that it is un-American to use foreign labor misses the value that using more affordable labor can have by freeing up American workers with skills to specialize in something that we can do better than anyone else. At this point I am making a value statement, since this is a more concrete matter to debate. In my view, it is problematic to want to get old jobs back instead of looking towards the future. Not all employment is created equal. No one is demanding that the U.S. stop importing food so that we can have more agricultural jobs, so why do we glamorize telephone operations and manufacturing work as somehow inherently needed to be done in America? But moving beyond the value statement, that is matter that should be debated. Not make a statement that presumes American companies that use labor beyond our shores are some how doing something elicit or getting some kind of unfair tax advantage.</p>
<p>&nbsp;---</p>
<p>Here is the CAP video:</p>
<p>
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<param name="src" value="http://www.youtube.com/v/6NPUBeo7ClY&amp;feature" />
</object>
</p>1012392@http://www.reason.orgMon, 21 Nov 2011 08:17:00 ESTanthony.randazzo@reason.org (Anthony Randazzo)Intelligent Leaders With a Sense of Their Own Limitshttp://www.reason.org/blog/show/intelligent-leaders-with-a-sense-of
<p>As the topic of income inequality has become more discussed, solutions are generally focused at some kind of program to redistribute wealth to make society more equal. In order to do this, you presumably would need smart people to decide how to do the redistributing. The challenge is, as <a href="http://www.econlib.org/library/Essays/hykKnw1.html" target="_blank">Hayek pointed out</a>, that there is a knowledge barrier insurmountable by human ingenuity. The reason that socialism can work in a society of 12 people is that they can all voice their wants and desires and willingly join a collectivist society. A prime reason why it doesn't work for a nation is that it is impossible for the leaders of a country to fully know the demands of society which are constantly changing and evolving. Smart men can not perfect rules and regulations that would establish an equal society without there being eventual breakdown.&nbsp;</p>
<p>The value of a market system is that you can have very smart people as leaders, working to ensure justice is preserved and rule of law is maintained (including some regulatory requirements, including regulations against theft and murder), but not trying to direct all of society and the economy. Ross Douthat, who I generally find to miss the mark more often than not, addressed this idea in his most recent NYT column and it was possibly the best thing I've seen him write:</p>
<p style="padding-left: 30px;">Inevitably, pride goeth before a fall. Robert McNamara and the Vietnam-era whiz kids thought they had reduced war to an exact science. Alan Greenspan and Robert Rubin thought that they had done the same to global economics. The architects of the Iraq war thought that the American military could liberate the Middle East from the toils of history; the architects of the European Union thought that a common currency could do the same for Europe. And Jon Corzine thought that his investment acumen equipped him to turn a second-tier brokerage firm into the next Goldman Sachs, by leveraging big, betting big and waiting for the payoff.</p>
<p style="padding-left: 30px;">What you see in today&rsquo;s Republican primary campaign is a reaction to exactly these kinds of follies &mdash; a revolt against the ruling class that our meritocracy has forged, and a search for outsiders with thinner r&eacute;sum&eacute;s but better instincts.</p>
<p style="padding-left: 30px;">But from Michele Bachmann to Herman Cain, the outsiders haven&rsquo;t risen to the challenge. It will do America no good to replace the arrogant with the ignorant, the overconfident with the incompetent.</p>
<p style="padding-left: 30px;">In place of reckless meritocrats, we don&rsquo;t need feckless know-nothings. We need intelligent leaders with a sense of their own limits, experienced people whose lives have taught them caution. We still need the best and brightest, but we need them to have somehow learned humility along the way.</p>
<p>See the whole column <a href="http://www.nytimes.com/2011/11/06/opinion/sunday/douthat-our-reckless-meritocracy.html?_r=1&amp;hpw" target="_blank">here</a>.</p>1012370@http://www.reason.orgTue, 08 Nov 2011 15:45:00 ESTanthony.randazzo@reason.org (Anthony Randazzo)Liberal Programs Deserve Blame for Income Inequalityhttp://www.reason.org/news/show/liberal-programs-deserve-blame-for
<p>Liberals are treating a new Congressional Budget Office study showing that income inequality increased in America over the last three decades as the smoking gun they&rsquo;d always been looking for&mdash;the ultimate indictment of America, capitalism, and apple pie.</p>
<p><em>The Nation&rsquo;s</em> George Vornick wrote a piece titled &ldquo;Yes, Virginia, There Is Income Inequality,&rdquo; billing the CBO&rsquo;s finding as &ldquo;dramatic.&rdquo; And he wondered whether the study, released as the Occupy Wall Street protests gather steam, would finally force the Republicans on the deficit reduction super committee to face some &ldquo;uncomfortable truths.&rdquo; <em>New York</em> magazine&rsquo;s Jonathan Chait wasted no time in accusing those not in a tizzy over the study of being &ldquo;blinkered ideologues&rdquo; and &ldquo;income inequality deniers.&rdquo;</p>
<p>But if not everyone is alarmed by dubious claims about rising Gini co-efficients, a metric that measures income inequality, is it because they are &ldquo;blinkered ideologues&rdquo; and "deniers." No. Income inequality tells us zilch about the only thing that really matters: Are the lives of Americans, rich, poor, and in between, getting better or worse?</p>
<p>The finding that generated the most headlines was that the after-tax household income of the top 1 percent of Americans grew by 275 percent between 1979 and 2007. But this figure was based on outdated pre-recession data that omitted 2008 and 2009, when the &ldquo;1 percenters&rdquo; saw a decade's worth of gains wiped out. This is nothing to weep over. They took the risk and they lost.</p>
<p>But is the fate of those lower on the totem pole cause for panic? Not really. The study reports that in the same period, households in the top quintile saw a 65 percent income gain; the vast middle in the 21st to 80th percentiles saw about a 40 percent gain; and the bottom quintile saw an 18 percent gain.</p>
<p>In other words, no group lost ground or even stagnated. So why all this breast-beating?</p>
<p>Few, besides vulgar Marxists, believe in the &ldquo;immiseration of the masses&rdquo; theory of capitalism anymore&mdash;the idea that the wealth of the top few is extracted by exploiting the labor of the bottom many. Burying this notion is one of the enduring intellectual victories of market theorists.</p>
<p>The post-liberalization successes of India and China have convinced even ardent liberals that markets play a crucial role in raising productivity and relieving scarcity, vastly expanding the proverbial social pie so that everyone has more to go around.</p>
<p>Of course, some gain more than others. But so what? Isn&rsquo;t an unequal distribution of wealth preferable to an equal distribution of poverty? Is there any amount of inequality that liberal worrywarts would accept? Suppose the CBO had found that every group&rsquo;s income increased by exactly 65 percent. Would they celebrate everyone&rsquo;s good fortune or mourn the unwavering income gap? The question answers itself.</p>
<p>If liberals accept the market&rsquo;s productive capacity but reject its distributive verdict, it&rsquo;s because they think of the market as an abstraction that spews out wealth like a spigot, with who gets what being completely up for grabs. Rich people get more, they believe, because they are more skilled at clawing their way to the head of the line.</p>
<p>But in functioning markets, there is a connection between creating and gaining wealth. Those on the front lines of wealth creation get more than those at the back, regardless of whether they began as rich people or poor. Steve Jobs, whose net worth upon his death was $8.3 billion, got rich because he created a $360 billion company, not because he cut ahead of others. It bespeaks a profound conceptual misunderstanding to talk, as the CBO study does, about the growing concentration of income in the hands of the rich, as if the &ldquo;rich&rdquo; existed apart from the wealth&mdash;the value&mdash;they create.</p>
<p>Another thing liberals are worked up about is that the study attributes rising inequality to fewer &ldquo;federal transfers&rdquo; to the poor. But that&rsquo;s not because poor people are getting less money from Uncle Sam in absolute dollars. In fact, they get more every year. It is just that they are getting a smaller portion of total transfers. This is not something that &ldquo;income inequality deniers&rdquo; have made up. It is what the study itself says.</p>
<p>It found that in 1979, households in the bottom quintile received more than 50 percent of all transfer payments. In 2007, similar households received about 35 percent of transfers. &ldquo;The shift reflects the growth in spending for programs focused on the elderly population (such as Social Security and Medicare), in which benefits are not limited to low-income households,&rdquo; the study explains. &ldquo;As a result, government transfers reduced the dispersion of household income by less in 2007 than in 1979.&rdquo;</p>
<p>In other words, poor people are getting relatively fewer handouts thanks to the Great Society programs that liberals themselves put in place for the elderly. This demonstrates the core problem with unfettered redistributionism: Eventually, you run out of other people&rsquo;s money. And when you do, you have to make hard choices about whose needs to prioritize&mdash;not demonize opponents.</p>
<p><em>Reason Foundation Senior Analyst Shikha Dalmia is a columnist at</em> The Daily<em>, where this column <a href="http://www.thedaily.com/page/2011/11/03/110311-opinions-column-inequality-study-dalmia-1-2/"> originally appeared</a>.</em></p>
<p><em>Update: Since many readers have asked, the CBO figures are adjusted for inflation. Check <a href="http://www.cbo.gov/ftpdocs/124xx/.../10-25-HouseholdIncome.pdf">"Notes and Definitions"</a> on Page 4.</em></p>1012488@http://www.reason.orgTue, 08 Nov 2011 11:31:00 ESTshikha.dalmia@reason.org (Shikha Dalmia)Don't Mind the Gaphttp://www.reason.org/news/show/dont-mind-the-gap
<p>I hate to be the bearer of good news just as the Occupy Wall Street movement is gathering steam, but protesters can stop worrying about rising inequality and go home. New evidence suggests that the super-rich got hit by the recession much harder than the rest of the 99 percent. This doesn&rsquo;t mean that they will be filing for food stamps any time soon. But it does mean that, contrary to progressive mythology, natural market forces might be restoring some semblance of cosmic justice.</p>
<p>There is no doubt that the cupidity of Wall Street fat cats combined with the perverse incentives established by federal policy created a financial bubble from which the uber-wealthy reaped rich rewards. In fact, over the last three decades, the top 1 percent of earners more than doubled their share of the national income from 8 to 17 percent, the Congressional Budget Office said last week. And it wasn&rsquo;t because they generated real value for the economy. Rather, notes Tyler Cowen, an economist at George Mason University, the expectation of government bailouts prompted financial managers to engage in riskier investment practices such as &ldquo;shorting volatility&rdquo; than they otherwise would have, ignoring long-term consequences in exchange for fat, immediate paychecks.</p>
<p>But &ldquo;long-term&rdquo; eventually arrived. <a href="http://piketty.pse.ens.fr/fichiers/enseig/ecoineg/articl/KaplanRauh2009.pdf"> New data</a> from the University of Chicago&rsquo;s Steven Kaplan shows that, despite government bailouts, in 2008 and 2009 the adjusted gross income of the top 1 percent&mdash;a disproportionate number of whom work in the financial industry&mdash;fell to 1997 levels. All in all, the fat cats took a 20 percent income hit, compared with the 7 percent lower earners suffered in the aggregate. Few economists believe that the super-rich will ever reclaim all their pre-bubble earnings.</p>
<p>But if the wealthy are not as well off as they once were, the middle classes were never as poorly off as liberal pundits claim. Indeed, their case that income disparity is growing rests on the notion that national productivity grew four times faster (1.95 percent per year) than median household income (0.49 percent per year) between 1979 and 2007. The remaining 1.46 percent in annual productivity gains, they postulate, must have gone straight into the Swiss bank accounts of the rich.</p>
<p>But there are enough holes in this argument for a Zuccotti Park cleanup crew to drive a fleet of garbage trucks through. For starters, Northwestern University economist Robert Gordon has <a href="http://www.nber.org/papers/w15351">pointed out</a> that this analysis is based on the common price index, a number that both overstates the growth in real income among the haves and understates it for the have-nots. Indeed, globalization and big-box shopping outlets such as Walmart&mdash;the very forces that liberals blame for inequality&mdash;have vastly reduced prices for modest-income folks who shop at such venues. But the Paris Hiltons of the world who patronize stores like Versace and Roberto Cavalli haven&rsquo;t benefited as much, because these businesses are almost completely immune to competitive price pressures. Once the productivity data is adjusted for such factors, Gordon found, the gap between the rich and poor grew only by 0.16 percent per year&mdash;or one-tenth of the 1.46 percent that liberals tout.</p>
<p>But none of this says anything about what Cowen has dubbed the &ldquo;personal well-being gap&rdquo;&mdash;the only gap that matters. Indeed, this gap, which measures the difference between basic goods that average people and gazillionaires like Bill Gates can afford, has been steadily closing. Gates might have personal physicians, private jets, and multiple computers. But thanks to technology-driven increases in productivity, almost everyone can afford bypass surgery, vacations and Internet access.</p>
<p>In America, well-being mobility, in a sense, comes to you without you having to go it. You don&rsquo;t have to be income-mobile to improve your quality of life. But that doesn&rsquo;t mean that Americans don&rsquo;t have income mobility. Far from it. Odds are, anyone who makes <a href="http://blog.american.com/2011/10/income-inequality-can-be-explained-by-household-demographics/"> basically sensible life choices</a> such as going to college, getting and staying married (preferably to a working spouse), and working full-time will find themselves in the top income quintile in their peak earning years.</p>
<p>This allows more Americans to be &ldquo;threshold earners&rdquo;: After they reach a certain income level, they can trade more work for greater leisure, a luxury that only the filthy rich enjoy in poor countries. Were this not the case, the ranks of the Zuccotti Park protesters might have been thinner by about a third. A recent survey by business analyst Harrison Schultz and Baruch College professor Hector Cordero-Guzman found that about 30 percent of them had individual incomes between $50,000 and $150,000-plus (about the same percentage as are under- and unemployed). These people have obviously decided that they have enough money, and that they&rsquo;d rather use their spare time protesting than working.</p>
<p>Surplus wealth, then, is driving the Occupy Wall Street movement as much as the alleged growth of income inequality. Somewhere, Joseph Schumpeter, the political economist who predicted that the very wealth that capitalism generates will undermine the intellectual case for capitalism&rsquo;s existence, must be saying, &ldquo;I told you so.&rdquo;</p>
<p><em>Reason Foundation Senior Analyst Shikha Dalmia is a columnist at</em> The Daily<em>, where this column <a href="http://www.thedaily.com/page/2011/10/27/102711-opinions-column-income-dalmia-1-3/"> originally</a> appeared.</em></p>1012487@http://www.reason.orgTue, 01 Nov 2011 11:29:00 EDTshikha.dalmia@reason.org (Shikha Dalmia)Rick Perry Makes a Good Plan Sound Badhttp://www.reason.org/news/show/rick-perry-makes-a-good-plan-sound
<p>The biggest problem with the energy plan that Rick Perry released recently is Rick Perry himself. Like a desperate used-car salesman, he is making such outlandish claims for it that his customers might walk out before taking a good look.</p>
<p>That, however, would be a pity, because the plan is actually better than any proposed by any president in recent memory.</p>
<p>The liberal blogosphere is up in arms against it because it stands for everything liberals despise. Unlike that other yahoo from Texas, George W. Bush, who made curing America&rsquo;s &ldquo;addiction to oil&rdquo; a guiding principle, Perry is absolutely unapologetic about this &ldquo;addiction.&rdquo; To the contrary, rapidly exploiting America&rsquo;s fossil fuel reserves&mdash;coal, oil, gas&mdash;is a key plank of his energy agenda.</p>
<p>To this end, he wants to:</p>
<p>&bull; Expand oil drilling in the Gulf and the mid-Atlantic, as well as federal lands including Alaska&rsquo;s hallowed Arctic National Wildlife Refuge.</p>
<p>&bull; Blast out natural gas trapped in shale basins through a new process called fracking. Fracking, incidentally, can help America unlock enough clean-burning natural gas to replace all its coal-generated electricity for 70 years. Enviros initially welcomed this development&mdash;until they realized it would make their beloved renewables even more uncompetitive.</p>
<p>&bull; Rescue coal, as abundant in the U.S. as oil is in Saudi Arabia, from President Obama&rsquo;s greenhouse gas strictures, which make it prohibitively expensive.</p>
<p>Perry isn&rsquo;t hostile to renewables. He insists he would use an &ldquo;all of the above&rdquo; energy strategy, including wind, solar, and biomass. But he won&rsquo;t give them government handouts, something that every president, Democrat or Republican, has done since Gerald Ford.</p>
<p>He also promises to end federal subsidies for non-renewables. This is more easily said than done, given the complex web of direct and indirect tax breaks and subsidies that have long distorted the energy sector. One would take his promise more seriously if he offered more specifics, but his plan is blissfully vague. Still, it represents progress (of sorts) that he hasn&rsquo;t identified any sacred cows for special protections.</p>
<p>However, the part that has liberals really foaming at the mouth is his suggestion to severely check the power of the EPA and give states more leeway to set their own environmental regulations. The standard criticism of such rollbacks is that states, released from Uncle Sam&rsquo;s iron fist, will engage in a race to the bottom and gut environmental standards to attract business. But states have a far greater incentive than distant bureaucrats to look for ways to protect their natural resources with minimal sacrifice of economic and other priorities.</p>
<p>All in all, Perry&rsquo;s plan offers a radical blueprint for energy liberalization. So what&rsquo;s wrong it? His sales pitch.</p>
<p>For starters, precisely because it is so ambitious, it won&rsquo;t be easy to pull off. But instead of leveling with the American public, Perry is exaggerating the plan&rsquo;s political feasibility, claiming that most of it can be implemented by executive fiat without congressional action.</p>
<p>Take the EPA, for example. It was created to enforce duly enacted federal laws, such as the Clean Water Act and the Clean Air Act, whose constitutionality courts have long upheld. Rolling back the EPA&rsquo;s authority over states will require congressional approval, something harder to come by, these days, than divine grace. Pretending otherwise is just dishonest.</p>
<p>What&rsquo;s more, Perry is touting his energy plan as a jobs program, claiming that it will create 1.2 million jobs. This is not as wild as Obama&rsquo;s promise of generating 5 million green jobs by shoveling stimulus money into politically-connected duds like Solyndra. However, job projections are notoriously difficult to make accurately, and there is every reason to believe that Perry&rsquo;s claims, largely lifted from oil industry studies, are way off. Michael Levi, senior fellow for energy and environment at the Council on Foreign Relations, estimates that Perry&rsquo;s plan will create 620,000 jobs at best. If Levi is right, Perry has needlessly opened himself up to attack by using inflated numbers. And for what? The main point of energy liberalization is not to create jobs. It&rsquo;s to make cheap and reliable energy available to individuals and businesses. That&rsquo;s the message that Perry should be hammering.</p>
<p>Perry touts his plan as the road to energy independence, and in this lies its fatal flaw. The world market sets energy prices, especially the prices of oil and gas. Energy won&rsquo;t cost any less because it is made in America. Yes, America should tap its energy resources if it can do so competitively. If it can&rsquo;t, it should buy energy from abroad, just as it does food, clothing, electronics, and every other commodity. Chanting an energy independence mantra will commit America to generating its own energy, eviscerating the entire initial rationale for energy liberalization: letting the market determine where and how to generate supply to meet demand.</p>
<p>Perry has a solid energy plan that can distinguish him from the pack and force a real debate on the issue. But he has to stop claiming that it can cure every American ill. He&rsquo;s pouring good medicine into a snake oil bottle.</p>
<p><em>Reason Foundation Senior Analyst Shikha Dalmia is a columnist at</em> The Daily <em>where this column <a href="http://www.thedaily.com/page/2011/10/20/102011-opinions-column-perry-energy-dalmia-1-3/"> originally appeared</a>.</em></p>1012486@http://www.reason.orgTue, 25 Oct 2011 11:18:00 EDTshikha.dalmia@reason.org (Shikha Dalmia)Stop Mortgage Investor Bailoutshttp://www.reason.org/news/show/stop-mortgage-investor-bailouts
Reason.com <p>It really is frustrating when banks, institutional investors, and hedge funds make money off of taxpayer bailouts of the financial industry. That&rsquo;s a travesty well worth skipping a week&rsquo;s worth of showers for. Unfortunately, we cannot roll back time to reverse the TARP bailout.</p>
<p>We can, however, stop a bailout <em>going on right now</em>: taxpayer money flowing through Fannie Mae and Freddie Mac to mortgage investors to ensure they don&rsquo;t suffer losses from families defaulting on mortgage payments.</p>
<p>Three years ago, Treasury Secretary Hank Paulson coordinated a SWAT-like invasion of Fannie and Freddie&rsquo;s corporate offices, taking the government-sponsored enterprises (GSE) into federal control. Since then the Federal Housing Finance Agency has been pulling the GSE's strings behind the scenes, and the Treasury Department has used them to <a href="http://reason.org/blog/show/newly-downgraded-fannie-mae-reaches">funnel $169 billion</a> of taxpayer money to mortgage investors.</p>
<p>Since 40 percent of taxes are paid by the top 1 percent, Occupy Wall Street protestors can be satisfied knowing that at least some of the wealth of the elite has been wasted on this bailout&mdash;but since a lot of those getting this money are themselves most likely in at least the top 10 percent, that $169 billion bailout ends up flowing right back to them.</p>
<p>But try putting that on a sign.</p>
<p>These mortgage investors had paid fees to Fannie and Freddie to guarantee payment on the mortgage-backed securities they had invested in, but nowhere in their contracts were they promised that the government itself would step in to cover the guarantees if Fannie and Freddie ran out of money. Nevertheless, that is what the government has done&mdash;all under the guise of the need to protect the housing market. (If you&rsquo;re reading this on a generator-powered MacBook Air in Liberty Square, <a href="http://reason.org/blog/show/how-fannie-mae-and-freddie-mac-guar">click here</a> for more details on how this all works.)</p>
<p>Yet it turns out that keeping Fannie and Freddie perpetually in federal conservatorship is hurting the housing market.</p>
<p>The future housing market cannot depend on taxpayer guarantees of financial industry investment in mortgages. But right now Fannie Mae and Freddie Mac are keeping alternative housing finance systems from emerging by monopolizing the mortgage market. In fiscal year 2011, Fannie, Freddie, and the Federal Housing Administration <a href="http://www.housingwire.com/2011/09/01/new-gse-appraisal-database-to-tighten-scrutiny-on-mortgage-lenders"> bought or guaranteed 95 percent of new mortgages</a>.</p>
<p>Yes, 95 percent. Every one of those mortgages is backed by taxpayer guarantees.</p>
<p>The reason is because Fannie and Freddie charge way below what private mortgage insurers would demand to insure mortgage investment. And that is basically the point, because if they charged the market rate there wouldn&rsquo;t be a need for Fannie and Freddie. The idea is that more people will invest in mortgages, making it easier to get a mortgage, if investors can get cheaper guarantees. The nature of the GSEs is to create subsidized risk at the expense of taxpayer funded bailouts.</p>
<p>Here is how out of whack the situation is: Fannie and Freddie currently charge around 0.25 percent of what investors make from buying mortgage-backed securities. The <a href="http://reason.org/blog/show/on-raising-the-g-fee">Congressional Budget Office suggests</a> that the GSEs should really be charging 4.4 percent.</p>
<p>That may or may not be good material for a wonky sign, but it is a seriously distorted subsidy for the financial industry. It means that instead of collecting $12.5 billion for investor insurance on the GSE's $5 trillion in mortgage-backed securities, they should have $220 billion.&nbsp;That should inspire some rage among protestors.</p>
<p>The Federal Housing Finance Agency finally hinted last month that it will consider raising the g-fee, but likely no higher than doubling the current rate. Which would mean that the GSEs would still be significantly undercharging the financial industry for a guarantee that the taxpayers will cover their investments.</p>
<p>So what can we do about this? There are <a href="http://reason.org/news/show/privatizing-housing-finance-system">lots of proposals</a> for how to dissolve Fannie Mae and Freddie Mac in a responsible way. The best method would be to raise the fee charged for guaranteeing mortgage investments steadily over five years to a level where no one wants to do business with Fannie and Freddie anymore, while at the same time forcing the GSEs to limit their business to <a href="http://reason.org/news/show/housing-finance-reform-testimony">smaller and smaller sized mortgages</a>. After all, why should someone buying a $500,000 home need federal financing?</p>
<p>But even if you believe the government should help poor people become homeowners, Fannie Mae and Freddie Mac are a terrible way to do it. Public risk for private profit is not good public policy&mdash;which I think is the text on a protestor sign somewhere in lower Manhattan. It is one of the roots of the subprime crisis and subequent financial collapse. At most, subsidies for low-income families should be part of the budget and made transparent for debate&mdash;they shouldn't distort financial behavior and bail out risky investment failures.</p>
<p>So why haven&rsquo;t we done anything about this yet? Again, Fannie and Freddie were taken over <em>three years ago.</em> Both the Bush and Obama administrations have had an opportunity to address the failure of the GSE model. The Treasury Department even issued a White Paper in February this year arguing we do not need Fannie and Freddie to support the American housing industry.</p>
<p>Yet nothing has happened.</p>
<p>The Democrat-led Congress from 2009-2010 talked a lot about the financial crisis and spent a year debating reforms for Wall Street, but in the end passed the Dodd-Frank Act, which left in place the bailout for mortgage investors and tens of billions flowing from taxpayers to the financial industry. The Republicans have now had almost a year to address the GSE failure through their control of the House of Representatives, but aside from a handful of bills passed out of a House subcommittee this year, Congress has chosen to let Fannie and Freddie continue to subsidize mortgage investment risk with taxpayer funded guarantees.</p>
<p>This failure of leadership should inspire an Occupy Washington movement demanding that Fannie and Freddie be dissolved and taxpayer funded bailouts and guarantees for mortgage investors be stopped. We will not have a housing recovery until the GSEs are out of the way.</p>
<p>The Tea Party movement started with CNBC&rsquo;s Rick Santelli&rsquo;s rant about taxpayer funded mortgage modifications for delinquent borrowers. Occupy Wall Street can turn its fury on the same issue and possibly inspire our elected leaders to finally have the courage to end the policies that are keeping the American housing market down.</p>
<p><em>Anthony Randazzo is director of economic research at the Reason Foundation. This article <a href="http://reason.com/archives/2011/10/20/stop-mortgage-investor-bailout" target="_blank">first appeared at Reason.com</a>.</em></p>1012321@http://www.reason.orgFri, 21 Oct 2011 00:00:00 EDTanthony.randazzo@reason.org (Anthony Randazzo)Short-term Thinkinghttp://www.reason.org/blog/show/short-term-thinking
<p>In an <a href="http://abcnews.go.com/Nightline/transcript-abc-news-jake-tappers-exclusive-interview-president/story?id=14764446&amp;singlePage=true" target="_blank">ABC interview last night</a>, President Obama defended his economic policy actions saying he thinks he made "all the right choices." While one could easily point to the failure programs like ARRA, cash-for-clunkers, and HAMP to help lower unemployment, boost the economy, or help the housing market, success is all in how you define it. And the president is defining success in very short-term metrics. We don't have -10% GDP. We don't have 20% unemployment. And we still have houses. Yay.&nbsp;</p>
<p>This short-termism is exactly the same attitude that Wall Street took during the bubble years. Many traders and firms were just focused on short-term profit, and had little incentive to think about the long-term risks. That led to serious problems that undermine the structural integrity of balance sheets and our financial system. So why does the president continue to have a short-term focused attitude. <a href="http://abcnews.go.com/Nightline/transcript-abc-news-jake-tappers-exclusive-interview-president/story?id=14764446&amp;singlePage=true" target="_blank">He says</a>:</p>
<p style="padding-left: 30px;">the thing I'm spending most of my time thinking about right now is how can I put people to work right now and how can I improve the economy right now and stabilize it.</p>
<p>If, in 2009, we'd focused on policies that would have created long-term stability we might not be in this mess today. Or it wouldn't be as bad. President Obama says the American people can't afford 13 months of politics (until the next election), so maybe he should stop thinking about policies in a re-election perspective and focus on the steps that would promote a recovery in the long-term and fix the many structural problems in our own economic policy framework.&nbsp;</p>1012305@http://www.reason.orgWed, 19 Oct 2011 15:10:00 EDTanthony.randazzo@reason.org (Anthony Randazzo)Soak the Rich or Soak the Super Rich?http://www.reason.org/news/show/soak-the-rich-or-soak-the-super-ric
<p>For Democrats, millionaires are the new Gypsies&mdash;a minority whom it is perfectly acceptable to persecute because its wealth is ill-gotten, not the product of hard work.</p>
<p>There is no better evidence of this than the &ldquo;millionaire surcharge&rdquo; that Democratic Senate leader Harry Reid of Nevada proposed to pay for President Obama&rsquo;s jobs bill. His version of the bill was defeated last week on a cloture vote, but that in no way suggests Democrats will abandon this rhetoric as the presidential campaign ramps up.</p>
<p>Obama&rsquo;s original funding plan was bad enough. It sought to specifically eliminate tax breaks for disfavored businesses like oil companies and hike taxes on families making over $250,000 a year. But Democratic senators from oil-rich states (such as Louisiana) and from those with lots of sub-millionaires (such as New York) nixed that idea. (Sen. Chuck Schumer hilariously complained that households in New York hauling in $300,000 annually are not rich because they can&rsquo;t afford nice vacations.)</p>
<p>So Reid changed Obama&rsquo;s soak-the-rich scheme into a soak-the-super-rich scheme. His plan would have left everyone else&rsquo;s taxes essentially untouched. But super-rich people faced an additional 5.6 percent tax on every dollar of their unadjusted gross income beyond a million, pumping $450 billion into Uncle Sam&rsquo;s pocket over 10 years.</p>
<p>If Reid had gotten his way, the top marginal tax rates in this country would have hit 50 percent, noted Howard Gleckman of the liberal Tax Policy Center. That&rsquo;s because the new surcharge would have come on top of the 0.9 percent ObamaCare surtax on the rich and the possible rollback of the Bush tax cuts for higher income brackets.</p>
<p>To think the super-rich would passively accept such fleecing is absurd. Millionaires have a mysterious way of vanishing from states that institute such taxes. Maryland imposed a millionaire tax in 2008; a year later, a third of its millionaires disappeared from its tax rolls. After Oregon raised income taxes on the richest 2 percent of its residents in 2009, about one-quarter of rich filers went missing. Ironically, even as Washington considered this tax, states around the country were abolishing similar ones, including New York, New Jersey and Maryland.</p>
<p>It is, of course, much easier for wealthy folks to escape state taxes than national taxes, especially since the United States in 2008 started imposing exit taxes worthy of totalitarian governments on rich Americans trying to leave the country. But if the rich can&rsquo;t flee, they can hire high-priced lawyers to find tax loopholes. They can also stop working and investing before they hit the million-dollar mark&mdash;hardly a formula to grow the economy or jobs.</p>
<p>Obama at least felt the need to soft-pedal the soak-the-rich aspects of his plan by trying to spread the tax burden as widely as politically possible. Reid experienced no such compunctions. &ldquo;In fact, by replacing the potpourri of tax increases, Obama would have used to pay for his stimulus bill with a simple, easy-to-understand millionaire tax, the Senate Democratic leader has done a wonderful job of clarifying his party&rsquo;s message,&rdquo; Gleckman noted sarcastically.</p>
<p>Separating the rich from the poor always involves some arbitrariness. But the Reid tax schema completely dispensed with ordinary understanding, classifying folks earning $999,999 among the middle class subject to ordinary tax treatment while labeling super-rich those earning $1 more.</p>
<p>Why Reid &amp; Co. drew such a bizarre line is obvious. Class warfare has little resonance in a country with rapid income mobility. Indeed, a 2011 Gallup poll found that only 1 percent of Americans mentioned income inequality as the most important problem facing the country<sup>.*</sup> That&rsquo;s because most Americans expect to move several quintiles up the economic ladder during their lifetimes. Only the rarefied top seems out of reach. Placing people who occupy that spot into a separate political class is the only class-warfare strategy that won&rsquo;t generate widespread opposition.</p>
<p>A soak-the-super-rich agenda needs suitable rhetoric&mdash;to which end supporters excavated long-discredited Marxist tropes. A blogger on the <em>Daily Kos</em> recently illustrated this perfectly when he declared the millionaire surcharge a &ldquo;small down payment to return the wealth to the people&rdquo; whose wages and benefits CEOs have been &ldquo;bludgeoning&rdquo; for a generation.</p>
<p>An unholy nexus between Wall Street and Washington certainly allowed some financial companies to get rich at the expense of taxpayers. However, that hardly describes the vast swath of America&rsquo;s private enterprise. Steve Jobs and Mark Zuckerberg did not rob taxpayers to create multibillion-dollar companies from scratch. But a persecutory mentality, in its zeal to ascribe collective guilt and mete out collective punishment, can&rsquo;t admit such distinctions.</p>
<p>Democrats want to make millionaires the minority that everyone loves to hate. The failure of Reid&rsquo;s bill suggests that their campaign may have stalled. But that doesn&rsquo;t mean we won&rsquo;t be seeing this kind of class-war tactic crop up again in the future.</p>
<p><em>Reason Foundation Senior Analyst Shikha Dalmia is a columnist at</em> The Daily<em>, where this column <a href="http://www.thedaily.com/page/2011/10/13/101311-opinions-column-millionaire-tax-dalmia-1-2/"> originally appeared.</a></em></p>
<p><em>*Editor's Note: This column originally attributed this statistic to the Pew Economic Mobility Project.</em></p>1012485@http://www.reason.orgTue, 18 Oct 2011 11:16:00 EDTshikha.dalmia@reason.org (Shikha Dalmia)The Real Reason Occupy Wall Street Should Be Upset With the Financial Industryhttp://www.reason.org/blog/show/the-real-reason-occupy-wall-street
<p>While many advocates of the free market have been quick to dismiss the complaints of the Occupy Wall Street protesters, at least one aspect of their critique deserves support. A sizable portion of the income received by senior corporate management&mdash;especially in the financial industry&mdash;stems from government-conferred privileges rather than from value creating activity.. While libertarians and free market conservatives frequently criticize outright corporate subsidies, they often fail to appreciate the extent to which the institutional structure of our economy is the product of state intervention, and to recognize how these structural interventions have conferred wealth upon a relatively small number of well connected individuals.</p>
<p>Modern corporate structure owes its origins to charters first granted by the British royalty and later by American state legislatures. The corporate form that evolved from these interventions is handicapped by a large universe of uninvolved corporate shareholders. Most Americans own corporate equity through mutual funds, ETFs and other investment pools. These investors may not even know which corporations they own, let alone how the companies are managed. Even investors who purchase individual common stocks usually have too small a proportion of their wealth tied up in a particular company to have a meaningful incentive to understand how their holdings are managed. Finally, with the recent inception of high frequency trading, institutional investors may own large blocks of shares in a given corporation for seconds&mdash;or even milliseconds&mdash;once again lacking the time, much less the incentive, to involve themselves in corporate management.</p>
<p>The pervasiveness of disinterested ownership enables senior management and boards of directors to extract economic rents from their corporations. Boards and management often form incestuous relationships that enable CEOs and other top officers to receive compensation packages far above their value added, along with severance arrangements that would never be tolerated by a sole owner or limited partners. In return, board members often receive out sized compensation for their limited involvement, not to mention the prestige associated with board membership.</p>
<p>This is not to say that high frequency trading, the corporate structure, big bonuses, or passive stock ownership are inherently bad. But they would not have arisen in their current form without the helping hand of government.</p>
<p>The state&rsquo;s creation of a liquid market in share ownership is but one of many government interventions that have artificially enlarged and engorged the financial sector. Other privileges include banking licenses which allow financial firms to lend money they don&rsquo;t have, the right to borrow funds from the Federal Reserve at rock bottom interest rates, and the expectation of a bail-out in the event of trouble.</p>
<p><span>While defenders of TARP often argue that the government actually made money on the financial industry portion the program&nbsp;</span>(<a href="http://reason.org/blog/show/actually-secretary-geithner-taxpaye" target="_blank">a dubious claim</a>&nbsp;at best)<span>, TARP and other 2008-vintage interventions still constituted an enormous transfer of wealth to the financial sector. In the absence of government intervention, many large banks and brokerage firms would have faced liquidation. By backstopping these firms, the government enabled their managements to stay in the game and thereby reap enormous profits and high salaries in 2009 and 2010.</span></p>
<p>The not-so-implicit government guarantee backing large financial institutions allow senior management and highly compensated traders to place one way bets. If they put on risky trades that succeed, they walk away with terrific annual bonuses and appreciated stock. If their trades go south, the worst outcome is that they lose their jobs. A more likely result is that they receive a diminished or possibly zero bonus and have to make do on their $200k+ base salary.</p>
<p>Again, the Occupy Wall Street crowd should not get angry that financial industry executives have the potential to make large sums of money. What is considered &ldquo;large&rdquo; is arbitrary, and it would be inappropriate to claim a universal standard for any executive compensation package. Where the anger should be focused on is in the second half of the reality, that there is no liability, that the upside bonus does not have corollary risk. This skews incentives and profoundly distorts market activity. In a fully laissez faire system, it is highly unlikely that trading profits would be able to support multi-million dollar bonuses, since they would be arbitraged out at as markets became more liquid. &nbsp;&nbsp;</p>
<p>Libertarians should not feel an obligation to defend the current pattern of business ownership, let alone the makeup of the financial sector, when debating with progressives. Instead, we may find substantial common ground in our critique of the current system if not the solutions to the problems it suffers. For example, a millionaire&rsquo;s tax fails to distinguish between individuals who have become wealthy through value creation and those who have extracted economic rents from their positions at the ramparts of the institutional structure.&nbsp;If the government could somehow capture wealth from those in the latter category without affecting the former, it would have more money to spend (or, preferably, to pay down the deficit) without further hindering economic growth. Unfortunately, the policy ideas from supporters of Occupy Wall Street make no such distinction.</p>1012284@http://www.reason.orgThu, 13 Oct 2011 14:48:00 EDTmarc.joffe@reason.org (Marc Joffe)Will Golden State's Malaise Play Out For the Whole Nation?http://www.reason.org/blog/show/will-golden-states-malaise-play-out
<p>Congressman Tom McClintock has written <a href="http://www.realclearpolitics.com/articles/2011/10/08/a_second_term_for_obama_would_make_the_united_states_go_as_california_has_gone_111620.html">a cogent analysis </a>of how California got itself into such dire straights:</p>
<p style="padding-left: 30px;">Bad policies. Bad process. Bad politics. Those are the three acts in a Greek tragedy that tell the tale of how, in the span of a single generation, the most prosperous and golden state in the nation became an economic basket case.</p>
<p>He paints a bit of a golden era picture of California in the 60's.&nbsp;</p>
<p style="padding-left: 30px;">When my parents came to California in the 1960&rsquo;s looking for a better future, they found it here. The state government consumed about half of what it does today after adjusting for both inflation and population. HALF. We had the finest highway system in the world and the finest public school system in the country. California offered a FREE university education to every Californian who wanted one. We produced water and electricity so cheaply that some communities didn't bother to meter the stuff. Our unemployment rate consistently ran well below the national rate and our diversified economy was nearly recession-proof.</p>
<p>University was not free, it was paid for by taxes, as was electricity.&nbsp; But the fundamental fact that government provided services in California back then were some of the best in the country and consumed far less of people's wealth remains true.</p>
<p style="padding-left: 30px;">One thing &ndash; and one thing only &ndash; changed in those years: public policy. The political Left gradually gained dominance over California&rsquo;s government and has imposed a disastrous agenda of radical and retrograde policies that have destroyed the quality of life that Californians once took for granted.</p>
<p>McClintock goes on to point out how the Obama Administration is copying the worst practices California has pioneered:</p>
<p style="padding-left: 30px;">Federal spending increased 26 percent in the last three years literally consuming and squandering the wealth of the nation at the worst possible time. Yet consider this: from July of 2005 to July of 2008, California increased its spending by 31 percent, under a Republican governor elected on the pledge to &ldquo;stop the crazy deficit spending&rdquo;. You can see how well that&rsquo;s worked for us.</p>
<p style="padding-left: 30px;">If stimulus spending, massive deficits and burgeoning government bureaucracies were the path to economic prosperity, California should be leading the nation from the top rather than from the bottom. After we lost the nation&rsquo;s triple-A credit rating this summer specifically because of chronic deficit spending, it should surprise no one that California suffers the lowest bond rating in the nation for precisely the same reason.</p>
<p>He goes on to dissect the policies California has pursued that have undermined the quality of life Californians enjoyed in its golden age, running from water policy to education.&nbsp; But as he points out, process matters too. The state legislature used to do a fairly good job of a few things, but once it tried to do everything, it found it could do nothing well:</p>
<p style="padding-left: 30px;">In the 1960&rsquo;s, California&rsquo;s legislature was respected throughout the country as the model for others to follow. It was professional, it respected process, and it worked. It did a few things, but it did them exceedingly well. It left local schools, local governments and local revenues in local hands. But beginning in the 1970&rsquo;s this began to break down.</p>
<p style="padding-left: 30px;">The humility that kept Sacramento from sticking its nose into the business of local governments gave way to the hubris that the state knew better what was important to local communities than those communities themselves. The appalling breakdown of federalist principles at the national level now geometrically compounds this problem.</p>
<p>McClintock also dissects the state's disastrous politics.&nbsp; It is a good read.&nbsp;</p>
<p>California's leaders, abetted by a short sighted, lazy polity too willing to vote themselves the wealth of others and to ignore any concept of tradeoffs, have eviscerated the state.&nbsp; There is nothing logical or sustainable about the path we have been on and appear dead set to stay upon. And the Obama administration appears to love what it sees and wants to take the disaster nationwide.&nbsp; Folks, please. Look at California, shudder, and vow "not the rest of us."</p>
<p>&nbsp;</p>
<p>&nbsp;</p>1012275@http://www.reason.orgTue, 11 Oct 2011 13:51:00 EDTadrian.moore@reason.org (Adrian Moore)Why Smart Presidents Do Stupid Thingshttp://www.reason.org/news/show/why-smart-presidents-do-stupid-thin
<p>The most depressing spectacle on the political landscape right now (besides a potential second term for Barack Obama) is the party of Lincoln entertaining the presidential ambitions of Sarah Palin and Michele Bachmann&mdash;women with better hairdos than heads. One needn&rsquo;t be a GOP-hater like Paul Krugman or Maureen Dowd to be dismayed by the growing anti-intellectualism of the party. Even David Brooks, a conservative commentator, has observed that Republican disdain for liberal intellectuals has morphed into a disdain for all intellectuals.</p>
<p>But modern intellectuals, having abandoned honest inquiry for unabashed activism, must themselves bear some blame for the backlash.</p>
<p>The GOP&rsquo;s descent into mindlessness began when the gaffe-prone Dan Quayle prodded a sixth-grader to misspell &ldquo;potatoe.&rdquo; The more the media lampooned Quayle, the more Republicans circled the wagons around him. Since then, Republican intellectual defensiveness has hardened into intellectual goofiness. No longer is stupidity a disqualification, even for the highest office in the land. Palin, in fact, has turned her lack of intellectual talent into her biggest asset, like Snooki on &ldquo;Jersey Shore.&rdquo;</p>
<p>Hostility toward the philosophes is not unique to Americans, of course. It was the ancient Greeks, after all, who executed Socrates because his philosophy conflicted with their piety. Likewise, there is an element of fear among religious conservatives that the intellectual project as such&mdash;not any particular brand of intellectualism&mdash;is inherently subversive of their settled wisdom.</p>
<p>But the bigger reason for this anti-intellectual animus is that every time really smart people run the country, things go spectacularly wrong.</p>
<p>The team of the &ldquo;best and brightest&rdquo; that Lyndon Johnson inherited from John F. Kennedy embroiled America in an ignominy like Vietnam&mdash;not to mention Medicare, a fiscal quagmire that, unlike Vietnam, the country can neither exit nor fix without courting bankruptcy or seriously screwing over millions of seniors.</p>
<p>Moreover, George W. Bush&rsquo;s failures resulted not from his alleged stupidity, as his most vitriolic critics believe, but the brainiacs in his Cabinet. Bush himself might have reveled in his Forest Grump image. But he assembled a team of intellectual stars including Dick Cheney, who was so smart that Beltway Republicans and Democrats wished that he had run for president; Paul Wolfowitz, dean of the Johns Hopkins School of International Studies; Condi Rice, provost of Stanford University; and Donald Rumsfeld, who made his mark in academia, politics, and military service. But this Mensa-worthy team, backed by Ivy League neocon intellectuals, left a legacy of Afghanistan, Iraq, and deficits as far as the eye can see.</p>
<p>The prize for discrediting intelligence, however, goes to President Obama. Unlike Bush, he wore his intellect on his sleeve, raising hopes that he could fix the country with sheer brainpower. But he has presided over a deterioration on every front: Deficits are worse, unemployment is higher, a double dip is imminent, and we have added another foreign misadventure.</p>
<p>So why do intelligent people consistently make such a hash of things? Because they are smart enough to talk themselves into anything. Ordinary mortals don&rsquo;t engage in fancy mental gymnastics to reach conclusions that defy common sense. But intellectuals are particularly prone to this. Hence Bush&rsquo;s brilliant foreign policy team used the apparatus of the state to search for evidence connecting Saddam Hussein with the 9/11 attackers, which its superior ratiocination told them had to exist.</p>
<p>The great hope from Obama was that he would be different. That his thoughtful, professorial demeanor would prompt him to look for policies that worked&mdash;not push a preconceived agenda. In fact, when he took office, I hoped that he would be an &ldquo;empirical president&rdquo; who dispassionately considered the evidence from all sides before making decisions. One&rsquo;s preferred position might not win every time under such a president, but it would at least have a shot, something that people outside Bush&rsquo;s ideological kin never felt they had.</p>
<p>But Obama has been infinitely worse. He has glibly cited Congressional Budget Office scores and stats to argue that extending government-subsidized health coverage to 30 million Americans won&rsquo;t exacerbate the federal deficit; that a debt-ridden country can borrow its way out of the recession; that pumping tax dollars into pie-in-the-sky green technologies would stimulate growth and produce energy security, and so on.</p>
<p>Ordinary folks might be unable to marshal facts and figures to counter such ludicrous claims, but they know bullshit when they see it. This has two effects on them: One, they feel profoundly disempowered watching their leaders deploy their smarts not on their behalf but against them. And two, since they can&rsquo;t become experts and academics, they resist by retreating into their own simple certitudes drawn from folk wisdom, faith and founding principles. Indeed, Sarah Palin is as much Barack Obama&rsquo;s gift to America as she is John McCain&rsquo;s.</p>
<p>The great political divide right now is not between eggheads and blockheads, as Maureen Dowd puts it, or intellectualism and stupidity, as other self-serving liberal pundits sneer. It is between two types of activism: an irresponsible, pseudo-intellectual one and a retrograde, folksy one. This divide will disappear when some genuinely smart and wise leader earnestly addresses the nation&rsquo;s problems, instead of pushing his or her loopy program.</p>
<p><em>Reason Foundation Senior Analyst Shikha Dalmia is a columnist at</em> The Daily<em>, where this article <a href="http://www.thedaily.com/page/2011/09/29/092911-opinions-column-intellectual-dalmia-1-3/"> originally appeared</a>.</em></p>1012484@http://www.reason.orgTue, 04 Oct 2011 11:14:00 EDTshikha.dalmia@reason.org (Shikha Dalmia)